Options vs Purchase agreements
I have an option to buy a rehab for 170,000 in a fairly good neighborhood but I don't have the money to complete the deal. The house fix up is worth about about 265,000 to 300,000 fair market value. Should I sell the contract and if so how much should I ask for to buy the contract. Or should I enter into a purchase agreement and do a double closing with the perspective buyer. I don't know how to do a double closing but I understand the mechanics. 
Dear bigdredd,
Your rehab deal of 170k sounds ok at this point, the market value seems to be to big of a spread at 35k.
How did you come about the market value?
What is your rehab cost?
Holding cost?
Market area?
Property details?
A few more facts will help in a suggestion on your best course of action.
John Michael
Also should I file the office with the recorder's office of deeds. I have the option until march 24th 2003
I came across the market value by doing a CMA with a realtor who specializes in that area. The city's 2003 assesment of the place is 119,000
I don't know the rehab costs and how do I find that out. I had one contracter say I should put about 10,000 dolllars work in and the value should go up dramatically.
What are holding costs I don't know what that is but if its the price it cost me to the option its ten dollars. I have three partners in on the deals with me as well.
The market area is Washington D.C. in a neighbrohood called 16th street heights translation a good neighborhood where up and coming yuppies want to move. it caters to that crowd. A great fixer upper for a couple or place where an investor could do a rehab project or yeah there is a sewer lien for 3500 dollars attached to the property but it does not violate any building codes.
The properties features are the following:
its a residential row house single family
Building Type Town Inside
Building Style 2 Story
Size 1,786
Bed Rooms 3
Bath Rooms 2
Wall Common Brick
Floor Hardwood
Heat Hot Water Rad
Air Conditioning None
It has no structural defects to my knowledge.
Bigdredd, you and your partners can get the cost of repairs added in the loan from the bank. Bankers are willing to loan you money based on the value the property once it is completely rehab'ed. As a matter of fact I just met with a banker on 12-03-02 to discuss a deal of this type. I was told that I would have to get the property appraised at it's value once all the repairs have been installed. Based on the rental income from the property I could purchase with no money down and make it possible to put cash into my pocket.
You will need to know your market, not all bankers are the same. You will just have find the ones that think outside of the box. Good luck with your project. <IMG SRC="images/forum/smilies/icon_smile.gif"> [ Edited by Vern on Date 12/04/2002 ]
I don't want to fix it up I want to get rid of it I need money. How much should I charge for my option. I am not trying to wait six month to sell a house please I make more money selling four options tax free of course if i don't exercise the option.
Market wise how much do you think the option is worth and please explain rationale.