A potential deal came across my desk today, which I think might be a candidate for a lease option. I am more involved in rehabbing, so this is a first for me. The property is in point pleasant, NJ...nice town. It is 936 sqft, 2 beds and 1 bath. Small house. It has been rented the past 15 years or so...rent about 1500-1600/mo. Asking price is 270k, I gave a soft pass to buy it cash and it doesn't look like the owner is interested in selling at where I would need to be to rehab. A home of similar specifications sold recently at 290k. That's why I'm thinking Lease Option. My concerns are that it is in an AE Flood zone, requires insurance and it is a pretty small house. is the flood zone enough to kill this deal. I'm concerned on how that will affect the tenant Buyers ability to exercise the option. Has anyone done a Lease Option on a property in a flood zone? I am planning on doing a property walk through with the owner this weekend. In my discussion with him today, I got the sense that while a rehab probably wasn't feasible he would Be negotiable. I am interested in in getting feedback from the community on this one. Thanks I appreciate your time.
Flood zones dont concern me as an investor if I plan to purchase in cash and not mortgage the property, but on resale, most people who are looking to purchase that house are going to need to get a mortgage and the banks will require flood insurance. For a house like that the flood insurance would probably be somewhere between 3k-4k per year. That would be a deal breaker for me. Best of luck to you.
thank you @Christopher Lombardi ! I appreciate your input. We live really close to one another, let's meet up for coffee. I will send you a PM.