Structure a Lease Option deal-advice please
Using Wendell's cashflow analyzer I am trying to structure a Lease option purchase and LO Sale on this property that a family friend is selling. He has dropped the price 3 times, I think over priced to begin with. Starting at 130k, then 120 and now to 115. I think the right price for the house is 115 and was going to offer 110K with the above analysis for putting in a Lease option/renter.
I was thinking of offering 110k amortized on 30yrs. $305/mo payment. and giving him 1% of a 3% option fee from the end buyer I place in the house ($1150).
I would put in a family to Lease for 1050/mo. and offer an option to purchase for $115k. With an option fee of (3%) $3450. 1/3 going to seller.
Should the buyer exercise at the 2year mark.
115k-3450=111550 loan amount.
My debt service for 2 years and 1/3 option fee would decrease the purchase price from $110k to 101530
The difference between 111550 and 101530 is $10,020 profit to me plus $2300 option fee received, and 2years of cash flow $7030, total profit $19,350.
First, am I leaving anything out to realize this expected profit?
Second, the seller is a friend of the family so he should trust me with this deal, and is motivated to sell it because he is an out of town landlord with this property. It doesn't need any repairs and is rent ready. I haven't confirmed but I think his mortgage balance would be about 74k so the 305 payment should cover that. Other benefits offered of course no maintenance calls for him, differed capital gains taxes, and a selling price near his current asking price. Think he would accept this offer? Thanks in advance for your advice.