Lease option on a duplex

[Account Closed]

Hello BP members,

We are looking for some advice on doing a lease option on a duplex. The seller is motivated (burned out landlord), just not sure yet how motivated. The asking price on the property is $54,000 (just reduced $5000), and both units are currently occupied with rents of $470 & 500 with good tenants. We are looking at putting 3 k down on a 3 year lease. How do we determine what to offer as a monthly lease payment? We would like to get it down as close to PITI as possible but what is acceptable or typical with an income property? I understand with single family homes the payment would be close to market rent or a bit more but is that the case with duplexes?

[Brian Gibbons]

The conversation is about "cash or terms"

I find it interesting that many people never look at the existing financing because that's a pivotal part of a terms offer (arm or fixed, amount piti, govt backed or private, etc)

I basically tell the seller the following after I find out the existing financing

"Mr. seller there's two ways I can help you, first I can give you a cash offer if you want to quickly sell the property, and that offer is not going to be top dollar because I need to factor in the costs to sell, about 10% of value, plus some minimum profit"

"The other way I can help you is to give you a cash monthly payment for a period of time and then pay off your existing balance in about 36 months.  The payment to you depends on total rents received minus expenses with some minimum positive cash flow"

"Either solution I can act fast usually within 10 to 15 business days"

@Steve Vaughan has some great negotiation language too