Possible L/O - Can These Numbers Work?

Comments(6)

• 
  kcbluesman3813th November, 2003

  Really do your homework on this one.
  
  First, I would not take an agents word for what rents could be expected, after all, his motivation is to sell the property.
  
  If you can still get your hands on a Sunday paper for the area and develop an average of what similar places are renting for, that would be a good start.
  
  You may test to see how motivated he is by requesting that the transaction is completely contingent upon you being able to find a tenant/buyer at the terms you would need to make the deal feasible.

• 
  OnTheWater13th November, 2003

  "listed: 239,000
  loan: 216,000
  mo. payment: 1639 (PITI)
  rents would be according to owner 1200-1500"
  
  Let's do the math, ok?
  
  If the rents are true, you'd net 1061/mo.
  If the comps are true (if you don't have any, please get them from the realtor), you could gross a max of 23k on the sale, and net about 21k (realtor gets 7% of sale price).
  
  Or, if you'd get 5k as down pmt (nonrefundable), and increase the payment to 2k, you'd net 361/mo minus any $ going towards their principal.
  
  That's what I see.
  
  Anybody else?
  
  Thanks,
  
  OTW

• 
  3qu1ty13th November, 2003

  Does the 55+ make this a more risky venture?

• 
  Joseph8814th November, 2003

  Is this a higher end property in your area? If so, I tend to avoid high end properties and stick to the middle class homes.
  
  From the numbers, it doesn't seem that market rent will cover your monthly expenses. It up to you if you want a negative cashflow during the time that you have a tenant/buyer in the house, but if it were me, I wouldn't lease option this house.
  
  Hope this helps,
  J
  
  Quote:
  On 2003-11-13 01:20, 3qu1ty wrote:
  I've been talking to an owner about a potential deal but the numbers and characterstics look a little suspect. The L/O seemed to be the best option.
  
  Property is a 3/2 in a 55+
  was rented but renters are moving because they bought a property which closes soon so it will be vacant. Owner who is an agent has owned for two months and wants to 1031 into something else. He is willing to carry.
  
  listed: 239,000
  loan: 216,000
  mo. payment: 1639 (PITI)
  rents would be according to owner 1200-1500
  
  Can the option to buy increase the cost enought to guard against the negative cash flow?

• 
  Joseph4416th November, 2003

  Hi
  You could do a l/o on this as stated
  above the only problem I see is you are
  very limited to a small clientell I know I
  live in a retirement park in fl.Unless you
  have alot of ammenities to go with the
  property you may have to market like ****Must Reach Freshman Investor status before posting URL's***y and get atleast 60 to 90 day
  exit clause and get the seller to make
  payments for that time till you locate a
  t/b.Hope this helps (have a good day).

• 
  3qu1ty17th November, 2003

  Thanks for the responses. I'll keep up the due diligence on this one.