I need some help with my first deal. This is it, a 3 bedroom 1 bath, the owner will carry for $1000 down $575 a month for 6 months on a lease option. Now, I did a little research and the property is worth from $60,000-$70,000. He wants $55,000. It needs minor repairs and he has done some remodeling already. He said he will bring the contract. Is this a bad thing and should I offer to bring my own or will this scare him off? Should I review his contract and make additions of my own? By the way, this is a descent neighborhood. Any help would be appreciated!!!
Even Robert Allen mentioned it in his book, if you dont know value, it won’t do you any good. That’s the very first thing you have to know is know how much homes are worth in that neighborhood. Another thing you have mentioned is that house is in a nice neighborhood. that’s a big plus. It’s ok to buy the ugliest house in a great neighborhood but it’s NOT OK to buy the most beautiful house in an ugly neighborhood.
Buying a home in a seller financed gives you a lot of advantages. Cutting the bank’s red tape is number one. If the house only needs cosmetic repairs, thats good too.
Always, read the contract and make sure you understand every word in it.
I think 6 months is too short on a lease option but not familiar with your area. What I might do is place an ad in your local paper BEFORE you buy it and see if you get any taker’s. You’ll know if you have a hot product to sell or not buy the number of calls you’ll get. Good luck!
Six months is definitely too short of a time for a L/O when you, as an investor, are using that L/O to control the property. In fact, you should be shooting for something like 2-3 YEARS on your lease option. As an investor, you can’t do anything with the house in six months to make it worth your investment. I’m curious as to why the seller is selling and how long have they owned the property? This sounds like the seller may be trying to take you for a ride.
I would NOT agree to sign the seller’s contract. YOU are the investor and you should be in control of the deal. The seller’s contract will NOT benefit you, I can assure you. IF the seller is uncomfortable with signing your contract, then get one that both will agree to sign. In most cases, any local REALTOR will have REALTOR approved contracts, including leases and options, that should work, if necessary.
Make sure seller provides you with prelim title—so you can see what liens are on property. (mortgages, back do taxes, judgments, etc.). Seller may owe more than the $55K
L/O are scary if you will be putting alot of money into the property. You dont have deed in a L/O and the seller can chose to back out after you have fixed up his property and you will have to sue him for damages, thats takes money and time. At least record a memorandum of option.