There is a 3/1 1000 sq ft. all brick home near a transportation hub for sale for $55k built in 1958
House Value is $35k
Owner is willing to owner finance with terms: 5k down, $400/month
This property is appealing to me because of the terms, minor rehab and potential cash flow.
What terms will you accept on this deal?
Presume Lease Option is your exit strategy since the post was here. What are rental rates? I'd take rental rates - 40% for operating expenses - the debt service ($400/month) = your profit. Are you happy with that number?
And if you're buying it for $55k, what will you be able to sell it for on a Lease Option in say 1-2 years?
Lastly, how much rehab does it need? You want to be in light so you can put a tenant/buyer in ASAP.
@Pamela Holmes , what am I missing? You are considering getting it under Contract for $55k, but its actual value is only $35k?
The only winner I see there is the Owner/Seller!...
The rental rates is between $800-$900 per month. I do intend to negotiate the sale price down but I doubt it will be around the valued amount due to the owner is willing to hold the the loan. The value is expected to increase within the next 2 years due to some major development going on around the area. At this point I am interested in the terms and the cash flow. I wanted advice on what the negotiable terms you will accept.
I agree with Brent. Where is the 35k value coming from? The county valuation? Zillow? If so those are not to be relied upon. Is the major development currently already in work or just plans?
I am with @Brent Coombs on this one. If it's value is 35K I wouldn't pay 55K for it. The value is the value. I know some things are coming in the future but essentially you are paying for the future improvements in the area and they aren't there yet. If anything happens that stops those improvements (The company chooses a different place to put a headquarters, the city won't permit the improvement for some reason) you are left with an overpaid property.
If it was able to appraise at 35K and you had your 5K down I know there are places that do lower priced mortgages (below 50K). But if it appraised at 35 there isn't a bank or individual who would loan you 55K on it. The only person that would is the person that wants to sell it. So I would keep looking myself.
Good Luck in whatever you decide!!
Hello, I am a newbie here and might be kind of green about deal or no deal. If the seller is willing to finance I don't see a problem paying slightly more than purchase price.
How is the seller financing structured? Will you be paying 400/mo for a little over 10 years with no interest and no balloon payment?
$50k with a 5% rate for 10 years would be $530.33 per month. $13,640 in interest for a total payment of $63,640 on a 35k property.
I think I would offer $30k at 5% for 10 years. That would give you a payment of $318.20 per month. $8,183 in interest charges and total payment of $38,183. Only because of the value of the property and potential cash flow.
I don't think paying 20k in finance charges(or financing fee) for a 35k house is a good move. Again I'm not the most seasoned here just wanted to throw in my 2 cents.