How would you structure the following deal:
Seller Asking $87500
Home is worth at least $107000 (tax records)
Seller owns free and clear and is pretty flexible
Home is in a good neighborhood and is relatively new (2003)
Home is currently being rented for $650 (month)
First of all, if the value of the home really is 107,000 and you say the sellers is flexible and is already asking an attractive price of 87,590 and it has no repairs… then you should really be thinking about putting this one under contract asap. It appears to be a good deal simply with that information. You can always change it if you discover the numbers are wrong.
My only concern is why is the rent so low?
In my opinion, in order to figure out what you need to do with this transaction (or any other) you need to give it some thought as to what your exit strategy is. In other words, what are you going to do with it? Are you going to keep it for long term or do you want to sell it quickly for cash now? This will help you create your offer so that it will support your plan.
If you want to keep it you may ask the seller to do the financing. Then you can sell it with a wraparound mortgage or lease option it or even rent it.
If you’re going to sell it right away then it really doesn’t matter. All you have to do is tie it up either with a purchase agreement, an option agreement, or lease option agreement. (Note - I don’t do lease option when I buy, only when I sell). It really doesn’t matter because you intend to turn around and sell it anyways.
Again, it sounds like a good deal. So, take action and remember the worst that can happen is you lose your minimal deposit ($10 to $100) if it doesn’t work out, or even worse you do nothing.
Mr Contreras…
Welcome to the board.… What courage you’ve revealed by using your own name… I would have thought the investment paparazzi would have kept you from doing that…
Happy Hunting…
Michael Quarles
PS… For those who may need to know… When Mr Contreras Types you may want to read…
Get creative! Offer the seller $107,000 and $750/mo PRINCIPAL ONLY payments for 5 years. Do the math. That’s $45k in principal reduction. You can then either keep that as a rental for yourself or flip that contract for a quick $5k to another investor.