Investors, What Would You Pay......
for a property in excellent condition, and it also has a lease option tennant. I' ve been contacted by an investor looking to liquidate, and I' m not sure how to handle this. Since the property already has tennant, I don' t see any front end profit.
Help is greatly appreciated.
J
Why is the investor so anxious to liquidate?
I wouldn't necessarily be concerned with front end profit, but I would say I need to get any security deposit collected and I would make sure to review any contracts as to what my monthly profit and back-end profit would be.
Wait a minute-- you've got a lease/option tenant which means there isn't any back end profit either-- except as you get a discount off the option price.
Wouldn't there be back-end profit if the sell price on the Option is higher than the investors asking price?
What would I pay at this point is nothing!
What is market value?
What is owed?
What equity position is there?
What has been the occupancy percentage?
Can a positive cash flow be produced from your payment vs rental payment?
What has been the maintenance ratio vs profit ratio?
Without the details one can not determine a purchase price!
[addsig]
Sorry for my lack of details......here goes
The guy has several (5) properties that he is trying to liquidate (moving out of the area). The properties are in desirable areas and the highest loan balance is 22k. The ARVs on the properties i am interested in are around 70k, and he is asking around 60 and 65k.
Both have tenants, and are in good condition (no repairs needed)
I was thinking of making cash offers and see how flexible he is, but I' m confused about my profit potential. Is there a back end profit if i can get the houses at 60 cent on the dollar?
J
I would say you need to be very cautious and ensure that his leases are assignable or can be sold. He has basically already sold the property under the option. You should make sure there isn't any clauses that would allow the buyer to purchase at your rate or have a first right of refusal.
I would check the terms to make sure you purchasing the units don't allow the L/O buyers out of their contract obligations.
Are the properties by chance owned by an LLC or something where you could just buy the shares? that would make it easier.
Thanks for the info dnvrkid.......And no. I don' t think there are any LLCs. thankx anyway............