How to Propose Lease/Option to Seller?
I am fairly new to investing and have found a property I am interested in. The seller is asking 115,000 for a 3 bed/2ba home that will need new carpet and vinyl flooring, and some other minor repairs. The seller is willing to negotiate the repair cost into the selling price. A realtor is currently marketing the property and he said that a copy of the appraisal is available with the APV at $126,000. He also indicated that the seller cannot provide financing. My question is, since I don't have 10% to put down on an investment property, should I propose lease/option. and how should I go about it; what should I offer the seller. Also how do I handle the realtor in this situation. Note: there's a burnt unoccupied property across the street which is an eye sore, and I just found out that she was renting the property and lives too far to manage it, so she definitely is a motivated seller. I would hope some of you seasoned investors will give me some advice on this. Thanks for all your great information. I live in the Atlanta area. Veronica :)
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latestarter,
Glad to meet you.
Veronica, you have a real estate agent involved in this deal. So the commission is going to come from somewhere, not that a Lease/Option is impossible, but highly improbable with anything left for you to make money when the final whistle blows.
Lease/Options are mainly done with the owner of the property, so if this is the method of investing you are interested in then I suggest you start looking for motivated sellers, who have not listed their property.
Welcome on board this board, keep the faith, real estate investing is a great career.
John $Cash$ Locke
John,
Thanks for responding to my question. Is there a way to structure the deal if the RE Agent agrees on a smaller commission, and still make a profit. When I proposed the L/O to him, he was not resistant to the idea. Can the contract be written where he will be paid when the property is finally sold?
Veronica
Veronica,
Yes, some agents will wait until the property is sold to get their money.
If there is enough room in the deal and the agent will co-operate with you then by all means go for it.
If this is your first deal then use caution, by caution I mean do not believe what you are told by anyone, do your own due diligence. Not that it is the norm, but people know appraisers or others that sometimes have a tendency to over state what a property is really worth. This is a word to the wise.
John $Cash$ Locke
John,
Thanks again for your great advice. I'll keep that in mind.
Veronica