Need Help - Unusual Buy Situation
EDIT: Meant to say UNusual buy situation!
I'm looking for some general advice and input on this situation.
I set up a "We buy houses" website in December and started Adwords advertising in February. I got my first form submission this week, and I'm trying to decide to buy or walk away. This will be my first investment. Here is the story:
Form request was submitted by the homeowner's girlfriend. The homeowner was jailed on March 5 for failing to pay child support. Homeowner needs to sell the home to pay back child support and get out of prison so he can get out of jail. Normally at this point I would just say no, but...
It gets a bit unusual because the owner is self employed as a glass artist (relatively well known), he makes his living from the home and has a glass workshop in the garage. He has also paid for all new electrical and an all new roof. He does not want to abandon the home, so he wants to rent it from me after I purchase it. He is willing to sign a lease as soon as he gets back to town, or his girlfriend can sign via power of attorney.
I tend to believe this story because he has a lot invested in the home, he doesn't have a career without it.
I have requested the following information:
1. Proof of income (last year's tax return)
2. Access to inspect the home (haven't been inside yet)
3. Proof that he will be released immediately upon payment of back child support
Questions:
1. Since he is in prison, someone will need his power of attorney to sign the closing paperwork, correct?
2. He wants to give power of attorney to his girlfriend - but she is Canadian and not a US citizen - is this a concern? Will the POA still be valid?
3. He is imprisoned in New York, but the house is in Columbus, Ohio (Hilltop). Closing will be in Columbus. If he gets POA in NY by a lawyer there, will it be valid in Ohio?
4. Is there anything else I should request from him before making an offer?
5. Is there anything I'm missing?
6. What is your opinion on this deal & story? What would you do?
I don't particularly want to hold on to the house long term because it is not a great area. Normally, I would just walk away from this area.
I would like to lease to him for a year, then do a lease option or direct sale to him. The numbers are good.
Purchase price - 15000 to 20000 depending on condition
ARV - 35000
Rent - 650
Taxes - 700/year
Using 3k as expenses and 5k for rehab (probably not needed if he just moves back in) I get the following numbers:
24% Cap rate, 15.8% CoC, 329/month CF