Hey, I have a possible deal but am kind of unsure on how to proceed. Basically I have a motivated seller that will sell sub-2 for 170,000. FMV fixed up is 225,000. The house needs around 20,000-25,000 worth of work. We have agreed verbally to a 18 month option period. I also have a 30 day contingency to find tenants. I guess my question is…does this sound right? I feel like this is a deal, Cashflow of $200 a month if I rent for $1500. Option consideration upfront of 7,000-10,000. And a final sale price of $200,000. With those numbers I stand to make $35,000-40,000 over 18 months. The new tenants would get instant equity if they fixed up the home and the owner is having is mortage covered for 18 months and then is paid off his 170,000. How do the numbers look? My other question is, what is the market like as far as people leasing to own with houses that need some work? This house needs new carpet, paint, and some other small things. Thanks for the help!
Kind of hard to find tenants that will rent to own when the place needs $25K rehab. It is possible. I would get the place sold before buying it if at all possible. Also 18 months will fly by really fast. Try to do 3 years if possible. The cash flow is a bit weak also, You should be making $300 to $500. You may have to give some of it as credit toward the purchase price but better to have it coming in just in case the tenant buyer skips out in the middle of the deal and you have to default yourself because you can not afford the monthly payments.