Landlord wants out.... he is in a favorable position and could sell on the open market relatively easily.
However, he has sought out the renter (my friend) to purchase direct from him. Below are the "shorts" on each component.
Area: Philly (Manayunk); Block has a greater variance in market value than most (based on house types)
Landlord/Seller Wants to avoid paying RE commissions; Wants to avoid capital Gains Tax by using a 1031 Exchange; Doesn't know his timing yet (wants flexibility)
Current Renter/Buyer (current renter for last 8 years on the subject property): Little Money to put down ~5%; Shows a small income on tax returns (waiter); Will have a tough time qualifying for a mortgage thru a traditional lender.
House: SFH; Seller bought for $70K -- 15 years ago. House worth approx. $200K; Seller willing to provide a partial loan (up to $50K) but not interested in more, as he wants to do a 1031 for a larger building.
Anyone have any creative ideas?? The seller is open to ideas... Your thoughts much appreciated!
Thanks in advance!
Lots of moving parts on this deal...
Friend has income to pay rent/buy, but has not claimed enough to qualify for loan, will have to partner up with someone.
Worth 200k and willing to loan up to 50k, means may be willing to take around 150k now.
Tenant has helped owner get to this level by renting for last 8 years...use as leverage in negotiating.
Variance in market value, focus on comps to justify lower price.
To 1031, owner has a tight timeline, make sure of flexibility on both sides...
It will be all about negotiating an acceptable deal and lining up a partner on loan, in my opinion.
I have purchased two properties in the manayunk/roxborough area in the last two years. It is definitely a great area. Is this a multi-family? If so, my one suggestion would be to obtain 75% commercial bank financing and owner finance the other 20%-25%.
If this is a multi-family, you will be able to count the other occupied units towards your income in order to qualify. The lender that I have been in contact with does not count the seller financed note towards the debt ratios- known as the DSCR in commercial finance language. If you want to find out more feel free to PM me!
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