Real Estate Investor · Vancouver, WA · Member since 2008 · 387 posts · 8 votes
From what I've read, a lot of people are putting $10 down on purchase contracts. If I call landlords though to buy via a lease option, they will of course be wanting 1st month's rent, last month's, a security deposit, and an option fee. What is the best way to pay the least amount out of pocket when buying from a tired landlord?
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
What they want, and what they get are two different things! :lol:
In my experience you just need to ask. So many people have lost the art of the negotiation. I am not sure if it is a lack of confidence, laziness, or some other reason, but get out there and negotiate.
If a Seller is desperate enough, they will do anything. No different than a Sellers market where buyers were bidding up the prices to ridiculous amounts.
The best advice I can give is to simply ask for the terms! What is the worst that can happen? They say no......doesn't hurt that much!
If they say no, do not take it personal. Walk away and see if they contact you in a day or two. If they do, you know you have a serious edge. If they do not, then follow up and engage in the negotiating process. Just keep your emotions in check, and maintain control of the flow.
If you are the buyer, and they are really distressed, you hold all the cards!
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
don't be to sure of that.
I was referred a landlord from an agent bird dog of mine.
the landlord has 50 properties, I was excited at first, but after talking to the seller (landlord) she's only wanting to get rid of 6 properties.
I'm meeting with her later this week, No money upfront and I'm actually walking out of the meeting with money!!
assignment of rents/leases :-)
regardless if they are a landlord or not, doesn't mean they might not be a motivated seller as well!
Indianapolis, IN · Member since 2008 · 759 posts · 185 votes
17y
What they want, and what they get are two different things! :lol:
In my experience you just need to ask. So many people have lost the art of the negotiation. I am not sure if it is a lack of confidence, laziness, or some other reason, but get out there and negotiate.
If a Seller is desperate enough, they will do anything. No different than a Sellers market where buyers were bidding up the prices to ridiculous amounts.
The best advice I can give is to simply ask for the terms! What is the worst that can happen? They say no......doesn't hurt that much!
If they say no, do not take it personal. Walk away and see if they contact you in a day or two. If they do, you know you have a serious edge. If they do not, then follow up and engage in the negotiating process. Just keep your emotions in check, and maintain control of the flow.
If you are the buyer, and they are really distressed, you hold all the cards!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
If you guys get me some market analysis that says it will sell, I am in brother!
Is there a bank in this country left that is big enough to handle our deposits on this biz!?!
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
17y
I was referred a landlord from an agent bird dog of mine.
the landlord has 50 properties, I was excited at first, but after talking to the seller (landlord) she's only wanting to get rid of 6 properties.
I'm meeting with her later this week, No money upfront and I'm actually walking out of the meeting with money!!
assignment of rents/leases :-)
Nick, Can you explain your exit strategy here in a little more detail? Are you wholesaling these 6 properties, or taking them over with a L/O to keep ...?
Thanks!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
17y
Robert,
Since these properties are out of state, Nick will place L/O Tenants then wholesale the deals to another investor.
In local cases, he keeps most for the cash flow.
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
17y
So these are sandwich L/O's?. Is the original seller aware that the option is getting sold to another investor who will have a L/O retail buyer in there... sounds messy with a lot of potential legal problems...?
just trying to understand all this...
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
17y
Originally posted by Robert Mack:
So these are sandwich L/O's?. Is the original seller aware that the option is getting sold to another investor who will have a L/O retail buyer in there... sounds messy with a lot of potential legal problems...?
just trying to understand all this...
Robert, I don't do Sandwiches, unless they're from Subway.
Simply b/c I don't feel as though I have enough control, I know Jeff has mentioned he was or has been open to the Sandwich idea...
For the 6 properties that I mentioned and all the other ones for that matter, I'm subbing these properties. The nice thing is about this particular deal is the seller owned these properties for a long time and has very little owed on the mortgage :mrgreen:
If you read some of my other post I've gone into detail my exit strategies, If properties are out of state I will 'wholesale' the Sub2 a few months into the deal, If they are local I will keep them for the cashflow and the big check when the L/O tenant that I place in the property purchases it from me.
So to recap, I don't use L/O strategies to acquire, only as an exit strategy. I will L/O the property to a T/B, but I still own the property and have control over the whole deal, as opposed to the Sandwich L/O
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
17y
Yea that makes a lot more sense, I've heard people doing Sandwich L/O but I always thought like you, there's no control of the deal.
Buying sub2 and L/O is something I recently started looking at and I will look into your older post's to try to gain some more insight.
Residential Real Estate Broker · Dana Point, CA · Member since 2008 · 147 posts · 7 votes
17y
Nick since you mentioned they owe very little let me ask you this question.
I got a call from a marketing piece with an owner who owns property free and clear (property worth around 900k) but in order to get the deal to work numbers wise i could only offer 200-250 do you really have luck with numbers that low? Im not a fan of getting punched in the face after i make an offer
Real Estate Investor · Vancouver, WA · Member since 2008 · 387 posts · 8 votes
17y
Yea theres no way I would offer $200k for a $900k property. That just makes no sense at all. When you say that it is the only way it would work for you, that tells me that you are being to rigid in your ways. You need to take a deal and structure a way to profit from it, not have "your way" and offer what works for that.
What would you do if you found a 20 million dollar property, offer 1 million because thats what you'd have to buy it at for it to cash flow from someone renting it out?
Nick,
I'm beginning to second guess my sandwich lease strategy. It would be a huge detriment I'm thinking to not have that as a possibility since I'm thinking I would basically lose out on any deal that I wasn't able to convince the sellers to hand over payments. Unless of course I could figure out a different exit strategy when buying on lease options.
Residential Real Estate Broker · Dana Point, CA · Member since 2008 · 147 posts · 7 votes
17y
thanks Jeff. No I was stating the only way I would do subject to or owner financing would be to get terms at that dollar amount for cash flow. Im not rigid was just asking a question. If I were going to do a sandwich l/o then the terms could be different...
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
I wouldn't pay a penny more than the property is worth to you. It doesn't matter what the owner has in the property or what the owner claims the property is worth. The only thing that matters is how you will make money on it. So, to answer your question, if the most you could pay is $200,000, then that is the max I would offer!
Back to Jeff's original question. Desperate landlords won't need first month, last month, security deposit, and option premium. I have some apartment buildings that I bought on a 10 year lease option. At signing, I paid the first month's rent and $10 for the option premium. My lease payment is exactly what the previous owner's mortgage payment is (the previous owner doesn't make a penny) and my purchase price is the balance left on her mortgage at whatever point I buy the property. Desperate sellers will do whatever you ask - anything to stop the pain!
Real Estate Investor · Bergen County, NJ · Member since 2008 · 390 posts · 72 votes
17y
Mike is this a sandwich L/O? Why not just sub2 so that you control the property and don't run the risk of defaulting, refinancing etc..? Or am I reading this wrong...
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
No, it's not a sandwich lease-option. I am renting the apartments to my tenants, I have not given anyone an option to buy the property.
I don't understand how you think doing sub-2 would change the risk of defaulting. Obviously, when you do sub-2, the previous owner still has the mortgage, but in the real world they will sue you if you don't make the payments. In addition, I run my business with some integrity and I would NEVER allow the previous owner to default on their mortgage provided I had a single dollar left. Those gurus that promote doing sub-2 so that you're not really liable for the mortgage are just low-life scammers as far as I'm concerned.