OfflineMy first deal may be right around the corner. There's a house across the street from where I live and an older lady use to live there. She's moved out and the house is vacant now. It's being offered by a realtor. I spoke to an agent at their office today and their asking 84K for it. I did some home work myself on the property before I called and the majority of what the agent told me I had already found out.
Single family
3 bedroom
2 bath
112 X 173 lot
built in 1954
There asking price is $11,994.00 higher than the lowest fair market I ran. The thing that bothers me is the taxes. In this area the taxes are very high on this property. The county has the taxes at $6,987.68 a year. And there's taxes due now in the amount of $2,084.43. Another thing that I must do is go back to our county court house and find out if the property has any liens on it. While speaking with the agent of course they want all cash and be done with it but I mentioned a lease option and the agent wasn't closed to the idea. She said that she would pass the idea along to the listing agent on the property and I should be getting a call tomorrow. My plan is if the listing agent is open to the lease option, I want to sub-lease it to a renter/buyer. After running the number's, with what it will take to ensure the taxes are paid and to pay on the property I possibly wont be in the negative (money out of my pocket to make up any difference)) but at the same time I will make a small profit if any. The renter will pay the note down and I will have control of the property during the lease/option period. Is there any advise anyone would like to share with me on this. I see myself having to make it through the first year or better yet finding a broker who could assist me in getting it refinanced right away without seasoning. Another problem is my credit is not the best. Thanks in advance,I welcome all advice and comments.
I haven't done a deal lately,but I've tried to keep current on information.
You may be able to get the money for closing the deal with hard money lenders and refinance a little later,Or flip it/reassign. You can find all the hard money that you need on the internet. Good Luck to you.MLJ
Hi,
Read your post. I want you to make sure this deal is right for you. Don't worry that another won't come along. They do once you know what you are looking for.
What you described is what I know to be a sandwich sub-lease with an option to buy. You lease the property from the seller with an option to buy but make sure you can sub-lease the property to another party also giving them the option to buy. Do a Google search for "Sandwich Sub-Lease" so you can determine if that is the best option for this house.
It concerns me that you want to buy a house that is listed higher than what is standard for the market. You need to also be aware that when many older folks move out of their homes, there can be a lot of differed repairs that weren’t taken care of. Some termite damage can cost a bundle so I would have the home inspected by someone you trust. Also know your market. Are prices expected to go up or go down? Forbes has a list of markets that are expecting another drop in real estate prices.
Know your true costs: If you buy the house outright to rent, what will your taxes, insurance, up-keep, etc cost? Will you hire a property manager or do that yourself? Plan for unplanned vacancies, accounting fees (it isn't as easy to do your taxes with rental property), etc. If you buy a property to flip you have holding costs.
Because of the costs involved in doing business you will find that seasoned real estate investors have a rule that they will only buy when they can get the property for 65% to 68% below fair market value.
It's hard to make the decision to make that first deal. I can't tell you how many times I checked all the numbers before I finally decided to buy. Do your homework. Ask for help from another investor. And as I said, don't be pressured to make this deal if it really isn't the right one.
One more thing; you have the beginning of a beautiful relationship with your realtor. But just because he is a realtor doesn't mean he knows what is best for you. That my friend has to be your call.
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
www.beaconinvestorsgroup.com
Thank you both for your comments, you gave me something to think about and research.
Do Not get emotional with house. Only go forward on a deal where you made your money on the house when you buy it(great deal), this way when the unforeseen pops up,& something usually does, you are not going to take a hit or have something come back & bite you in the butt.
We had deal (after investing for 10 yrs) where some lawyer dropped the ball & did not record the 1st mortgage on the property(vacant lot); it was going to county foreclosure auction for non-payment of homeowners ass. fees, we were the high bidder, paid $ 25K cash for it, went to flip it & found thru the title co. there was a mortgage...needless to say it was not good. The market value was about $ 80K at the time; we got an lawyer & found out the mortgage holder(developer) was bankrupt, so he tried to pay it off to the trustee, N/G...so after 2 yrs, countless motions/court appearances( & $5K in legal fees) we got a "quiet tile". Problem - Market dropped, lot is valued at
$ 10K now, if we could sell it at all...We'll just leave to our son & let him sell it 20 or 30 yrs from now...Gary/Jill
After speaking with an agent from the company that is listing the property I mentioned above, I found out that they have a family already lined up that will be purchasing the house by the same means that I was trying to get it (lease/option). I'm now investigating 2 other properties that look promising. One thing for sure I'm not going to stop til I complete my first deal. Stay tuned cause when I do and I will it will be posted in the "Deals" section of this blog. Until then success to all no matter how small or large it may be.
lbrown