New with a question

6 Replies

Hi everyone, My name is Rick Rascoe and I am new here. I formerly studied sheet's program, and read many others like Garrison. I did a couple of deals a several years ago, eventually blew it, took a long time to lick my wounds and realize I need to get into real estate again, but with more due diligence and patience. I need to get busy because I am 49 and don't want to work in the mill till I die.

   The question: I still own the home I previously lived in free and clear. It was sided before I moved out, has been re-painted inside, and has been recarpeted. There are issues like; temporary steps to the porch; a bank will likely say the roof needs replaced; the heat is electric baseboard with a pellet stove in the living room (could remove it). 

Do I:

1. Keep it and rent it out (yes I am willing to be a landlord)?

2. Sell it on a 3 year lease option for top market price plus 2 years appreciation ($71600) and the rental income ($600 - $700 mo.)?

3. Sell it for cash ($60000) and use that cash to use on creative deals on other properties?

I would like some of your input. I have sat on the property for two years (that's ALOT of lost income!)

4. Rent and pull money out. This is the option I think makes more sense, but the two financial institutions I spoke with only lend on your main home.

I don't know where you are in Indiana but you might want to sell it for cash as is to an investor and use that cash for down payment money to buy 20% down payment properties, diversify your risk, or one four Plex at FHA 3% and live in one of the four,

See a CCIM realtor locally.

Thanks for the input Brian!

Welcome@Rick Rascoe  !

IMHO - I would go to your local credit union or State Bank and refi to cash it out.  Then sell it on a lease option [about only 5% of the tenant/buyers ever actually exercise their option to purchase].  So, you basically have a self managing "rental" with a lot less headaches than a traditional rental.

Take that cash from the refi & buy another SFH REO. Fix it up a little and then refi it. Sell on lease option. Rinse & repeat!

- it's always good to see another Hoosier utilizing this great site!

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     Thanks Shawn! That's actually the conclusion I came to. I talked to the C.U. yesterday and they said I could get a 70% second (yes a second and I have no first!) I planned on trying to use that $40-49K to either buy two to four properties creatively with little money down or to buy an easy fixer for another lease option property. As for the old house I planned on selling it on a 3 year lease option, medium option fee,  a little higher than average rent with some rent credits. If they exercise the option OK, If they don't OK. Either way I win.

     I know some people advocate staying away from lease options; I wonder if it is because some investor's are very unscrupulous with their customers? Even Marc Garrison once told me that he would sell on a land contract, not a lease option. I think it is a great way to have less management headaches and to build capital, as you have stated. That also gives me time to try to find a good team of people to work on future properties. I made the mistake of trying to do it all myself before, and that's not fast enough.

     I did look at a cheap property this week, but I would have had to wholesale it, and that makes me nervous (afraid I'd get stuck with it). It was very small and had a lot of issues. I called a guy from Kentland once and I think fixer uppers is all dealt in. He bought them ragged, never touched them, and re-sold them. He told me he did quite well in that business.

     Thanks again! Have a great day!

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