I’ve accidentally came across a developer who is willing to sell two side by side homes as a package for 20% under market value. Which would be around 800k the homes are worth about 1.2 million together. As I don’t have 160k cash sitting around I don’t want this deal to go to waste. The 20-30k I can scrape together myself isn’t going to put a dent in the down payment. Looking for the best creative finance solutions.
Rental Property Investor · Jersey City, NJ · Member since 2018 · 176 posts · 80 votes
5y
I agree with Waylon, first make sure there are no problems with the properties. It’s a hot market, pretty much everywhere so I’d be curious to see the motivation to sell these at 80% market value.
If all checks out, run the numbers to see if they have good cash flow as rentals if you do lease option for 5 years. Your cash on hand would be enough for an option fee. Then you turn around and rent these properties and while you cash flow, try to save up for 20% down payment in the next couple years (the option fee can be counted towards your down and you can negotiate portion of your monthly payments as credit towards your purchase price). Once you have the money and ready to exercise your option to purchase first try to talk to seller to see if they would be open to owner finance it for you with that 20 percent down since you will have shown them that you are a responsible renter. If that doesn’t work you go get a loan.
Another way to go about it would be bringing a capital partner to fund the down payment.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
5y
@Michael Dezzi, reminds me of Tony Curtis being "accidently" able to buy a "mink" coat for just $35 (The Rat Race, 1960). ie. Mink, not.
ie. Unless the developer thinks you can come up with the goods faster than "the market", then I reckon you're being led astray as to the actual market value.
Or, what am I missing? Welcome to Bigger Pockets. All the best...
Michael , no one is selling property like that below market value, they don’t have to! I would be skeptical of the value he is placing on it . Do your homework and investigate, investigate and do some more investigating .
@Michael Dezzi, reminds me of Tony Curtis being "accidently" able to buy a "mink" coat for just $35 (The Rat Race, 1960). ie. Mink, not.
ie. Unless the developer thinks you can come up with the goods faster than "the market", then I reckon you're being led astray as to the actual market value.
Or, what am I missing? Welcome to Bigger Pockets. All the best...
Excellent reference to "The Rat Race". Well played Brent.