Purchase Agreement With An Option?
Hello everyone.
While reading the posts on this site I saw few posts
that mention purchase agreement with an option.
I would like to learn more about it.
As I unerstand you can offer a potential seller this agreement stating that after 30 days or so that the Buyer has an intent but no obligation to purchase the MH. This will give you 30 days to look for the buyer and If you can't find one you can back out of the agreement
and forfeit initial deposit that you made to the seller as per agreement's condition. Am I understanding this correctly? Does any body has a sample of this kind of the agreement. TIA.
If banks are not interested, you can educate the seller that they can take a down payment and then structure two owner financed notes, the 1st lien would be sold at closing, and the second (the amount they would have assisted with anyways) carried to term and retained.
However, you would have to have credit at least in high 500s, have some landlording or park experience, and a down payment of AT LEAST 10%, preferably 15 or 20.
Hope this helps clarify options, Dave
If banks are not interested, you can educate the seller that they can take a down payment and then structure two owner financed notes, the 1st lien would be sold at closing, and the second (the amount they would have assisted with anyways) carried to term and retained.
However, you would have to have credit at least in high 500s, have some landlording or park experience, and a down payment of AT LEAST 10%, preferably 15 or 20.
Hope this helps clarify options, Dave
I have good credit, experience with landlording single family residences, and cash that I would perfer not to part with!!!!
Perhaps this isnt the deal for me.....thanks for your input - I am a gambler of sorts (much to my husband's dismay!) but not to the extent that I may have to regarding this one. DJ
I'm not seeing the numbers. A lone for $600k will cost you over $40,000 /yr in debt service.
Here is a great tool to analyze property deals that this website provides:
http://www.thecreativeinvestor.com/modules.php?name=Tools&op=ProForma
In general, a lot of investors use a general rule of thumb of having a 10% cap rate. In other words if the NOI is $41056, then they wouldn't pay over $410,560 for the property. If it is in a slum area, they would pay even less. If it was a fabulous are and /or had upside pontential, they may pay more.
Good Luck!
64-Ford & JCHandle or on the money.
Numbers don't seem to work. First & foremost, lets take a look at the financials and see why the property is only generating an NOI of $41,056.00. Are they paying themselves a healthy management fee, what other misc. expenses are thrown into the equation?, etc.
Problem number two will lie with financing, as there will have to be a very good reason why the numbers arent adding up.
But before you become discouraged, first look at the nitty gritty. If you can get your hands on a 12 & 24 mo. trailing financial statement, along with a current rent roll, I'd be more then happy to take a peak at it for you.
The bright side is, if the seller is pricing the property out of the market, perhaps a better understanding of the viability of this investment can work toward your favor when it comes down to making an offer.
[addsig]
Suggest if you want serious advice on this, you post on Commercial side of site, the red tab at the top when you first sign on.
As a MHP is a commercial property, and this site is for MH (personal property) financing, this site really is the wrong place.