LTO

General Real Estate Investing
1

I have found a house that the owner wants me to buy from him. The thing is he is in an LTO at the moment, he just did it wrong and the occupant is not ready to use the option, also he has interest only loans and he has missed a few payments. I talked to him all weekend and he finally admitted that he did receive the payment from the occupant he just didn’t make the mortgage payment. I have also talked to the current tenant and they are willing to commit to a 3 year agreement for the LTO. The home was bought for 250k and was last appraised at 290k he wants to be bought out no other option. His asking price is 250k basically he just wants the investment back and out of the mortgage. I would like to know what the guru’s would do in this situation. If this happens this would be my first deal in REI.

Benjie

2

Hi Benjie,

  1. Be sure the property cash-flows for you.
  2. I would probably hire an appraiser immediately…unless you have an appraisal that is less than 90 days old.
  3. Will the occupant be willing to put up option consideration? This would help you make a couple of the missed mortgage payments.
  4. On the surface, it looks like it could work out for you. Especially, if the current occupants have been making their payments.

Good luck on on your first deal.