Hi, all. I’m hoping I can get some help from the braintrust on the board here.
Homeowner contacted me with a property she doesn’t want. The bottom line is she’ll give me a Pure Option on it for what she owes, approx $209K. My market analysis shows a FMV around $240K. I believe this to be accurate and on the conservative side.
South Florida location, buyers market. Is there enough meat on these bones to pursue this? If so, what would the experienced here do to expedite finding my buyer?
I’m new at this, scared and excited at the same time. Your help is much appreciated. Thank you!
You didn’t say if there is a building on the property, but in any case if nothing else, assign the contract and make some cash off the assignment.
If you do contract the property, make sure the contract reads beside your name (and or assigns)…
Also, in the special agreements section of the contract, you write in (contingent on buyer preforming due dilligentes and contingent on buyer getting reasonable financing at 6% interest), or whatever you want as the interest rate.
This way you leave yourself a way out of the contract in case something goes wrong, ie, not finding a buyer to assign the contract…
Good Luck
Thank you for replying. It’s a SFR, 3/1. Clean as can be inside. The Pure Option Agreement I’m using doesn’t concern me. I’m confident it’s a good one, and it allows me the right to assign at my discretion. And if I can’t find a buyer then my option just expires. So I’m not worried in this regard.
My concerns are more along the lines as to whether of not there is enough of a spread for this deal to be attractive enough to another investor, or even to a retail buyer. As I said, I’m in a strong buyers market right now. I would hate to spend big bucks on marketing and come up empty handed. That would hurt!
Another investor would not even consider this (at least one with any experience), especially in a buyer’s market.
However, you do have some decent equity (as long as your market isn’t tanking) to try to retail it. Offer it for $215K and move it.
Raj
That’s what I was thinking. But a retail deal at $215K doesn’t seem like it’s worth the hassle.
Doesn’t seem like it’s worth the hassle?!!
Let’s see, you put an option on the property for what, $10? You get the opportunity to make at least $5K on a deal with practically no risk and it’s not worth the hassle?
Raj
Hehe, I see your point, Rog. But I’m thinking between the cost of marketing, taxes, closing costs, etc., I’d be lucky to walk away with that $5K.
FDR,
You have an option. The only thing that you have to sale is an option. Therefore, you have no closing costs (save for the few pennies it takes for the paper and ink to print the contracts).
You can buy a whole slew of signs for $50. Most places have a thrifty nickel type paper that lets individual advertise for cheap/free. Heck, most newspapers only cost $500 or so for a week of advertising if you want to go that route.
Taxes are taxes. If you’re going to make money, you’re going to have to pay them. Sorry.
The level of risk determines the level of reward, FDR. You have no risk. Don’t expect to make a $100K.
On your $5K, assuming that you have $1K invested in marketing, etc (shouldn’t) and assuming you are in a 25% tax bracket, that’s still $3K in your pocket at the end of the year.
Raj
Your thread piqued my interest. I am also a newb to REI and looking to get started in South Florida, Broward County to be exact.
I think based on the other advise I have read on this topic Roger J’s advise to you is sound. You have an excellent opportunity here to make some quick easy $. Dont be shy go for it!
I would recommend reading some of the posts on this board by a user called petemfa. He really swears by options and has much experience and advise he shares in his post. One thing he advised was putting an add in the local paper for an AS IS Handymans special at a price lower then what you actually want and start up a d bidding frenzy. The add wont cost much so no worries there, and you dont HAVE to take the offers. Take a look at his posts for more details.
As is said I havent tried this YET but I am working on it. His advise simply made sense to me.
Please keep us updated on how this goes for you. I really would like to know how this turns out for you.