Would you do this deal?
It's a little involved, so please bear with me. This TH co-op is at 160K, after much negotiation. No contract, but a verbal.
Here's the deal; my 22yr old and his best friend are looking for a place to rent for the next couple of years. This development is well down the road for a developer buyout expected within two years. The payout for this unit would be slightly over 220K. The monthly payments would be lower than any comparable rental. They both love it.
I would put up 30K and so would my son. We would split the profit 50/50. Although these sold for 350K at peak, there has not been a sale in over 2 yrs (130K). Everyone is hanging on for the payout.
This seller is elderly and wants to relocate near family. 30K is not much $$$ to me. It's sitting in the bank at zero. I have no need for it. My son has 70 in mutual funds and will cash in his share. Financing is no issue as I have a 25yr relationship with a commercial bank. We will pay 5.75% w/ a half pt for 5 adjustable money amort over 20.
Issues: Although 66%+ have signed letters of intent and the contracts are starting to be signed this month, there is a movement afoot to queer the deal based on rising land costs. It won't be firm until they 66 contracts signed.
IF the deal falls apart I am quite sure there will be others (higher) but these will take longer. The co-op does not permit rentals, so if things were delayed it might cause a problem. My kid may not be happy there, get transferred, etc.
I am not too concerned but don't know if I should just have him rent his own place. On the other hand cheap rent in a great location with a payday of 20k+ isn't bad.
The little old lady has replaced all major sytems and the place is spotless with an end-unit (plenty of yard for "cookouts, cornhole, trashcan,etc) Parking is plentifull and they can walk to restaurant and bars.
I think their rough payemt is 625 each *fairly cheap* as it includes all utilies and taxes.
Thoughts?
byw -he already has a solid rental and good tenants of two years. He has a good head on his shoulders.
Sorry about the length.