Need Some Help With An Apartment L/O
Hi all, I have an 8 unit apartment building that I would like to try and offer a lease option on. The seller is pretty motivated as it has sat on the MLS for almost a year. What I am not sure of is exactly how to go about it figure wise. Unfortunately it is being realtor owned so I don't really have the chance to sit down and talk with the owner. I do know he is motivated because he has dropped his price three times. The property comps out at about 235K just not a big market for apartment owners for some reason. What I am not sure is how to calculate what to offer as a lease option payment because I don't know what he owes on the building. If he owns it free and clear obviously that makes it easier but if not then I am not sure how to proceed. My thought was that if I went 100% financing my payments at 8% interest would be about 1377 PITI so do I want to try to offer less than that a month to him say $1100 per month? or do I offer more like say $1400 per month? the gross income on the property is $2880 per month at 90% occupied. Also when I set up something like this, I assume he still pays the taxes since he is still getting the tax and appreciation benefits? Ans how would you work repairs? Is it fair to require him to do repairs since I am the leasee of the whole building, should I offer to split maintenance or should I offer to take on maint responsibilities? I thank you all in advance for your comments, I just haven't tried a L/O with a property this big before
Joe
[addsig]
Son, that's a pretty big deal you gotcher self aholt of. You haven't told us what the price being asked is, but in this neck of the woods the numbers seem out of wack to me. Seems to me 2880.00 per month should equate to 144k selling price, but that's me. Maybe there is a reason it has sat for so long. When a property is agent owned it means the agent owns the property so I don't understand why you can't talk to them belly to belly and eyeball to eyeball. Now I can understand, being agent owned, why it hasn't sold. A lot of agents think they know more than they do, plus the temptation of all that property....
Now if you have decided that you really want that property, you need to insist on a sit down with the actual owner. I don't know of a motivated seller that won't agree to meet with a serious buyer with the emphasis on serious. Once you've had that meeting you should know what it will take to close the deal and whether or not you have the resources or are willing to meet the sellers terms. You are the buyer you have control. If you don't know the sellers specific needs you didn't ask the right questions, or ask the right way, or the seller wasn't really motivated. You must know about what they owe and/or what they need. You must know what their expectations were when they bought the property and what they are now, THEN prepare a plan of action or a creative way to control the property.
Good Luck,
Shawn(OH)