Need an honest critique of my post and why I am not getting any leads or responses?

Question

Hello,

I am looking for an honest critique of my post. I have what I believe is an amazing offer for truly passive income for experienced or non-experienced investors and I haven’t gotten any responses or leads. I am wondering if it is the post or the deal or me? any thoughts would be appreciated. Essentially, why would you not be interested in the deal? Or why would someone that this would work for not be interested in this deal?

http://www.biggerpockets.com/forums/517/topics/217726-118-500-property-for-sale-with-a-tenant-buyer-contract-in-place-for-139-900---3-year-term---get-in-with-20-down-around-25k-with-closing-costs

and this was my first post, I thought it was not drawing attention because of the title, but I got more views on this one then the second post above:

http://www.biggerpockets.com/forums/517/topics/216714-passive-income-producing-property-for-sale-with-equity-arizona

Thank you in advance!

J Scott · Answer

Here is what the first paragraph of your post said:

I can't speak for others, but that makes no sense to me.

What do you mean $118,500 to me and under contract for $139,900?  Does it mean you have it under contract for $139,900 but are somehow selling it for $20K less?

What does "Rents to current buyer for $900 per month" mean?  Does that mean it's currently renting and the buyer will have a tenant paying $900/month?  Or does that mean it *could* be rented for $900 month.

If it's currently rented, you should indicate the lease terms.  Also, consider that $900/month for $118,500 isn't going to be considered a great deal by a lot of investors around here.

You also mention the cost of PITI and home warranty -- why should P&I and home warranty matter to a buyer?  Are they able to take over the financing?  Are they required to pay for an ongoing home warranty?

My guess is that you're not getting much of a response because your post is very unclear as to what you're attempting to sell, and also because it doesn't sound like a great deal.

Joel Owens · Answer

Your posts are confusing as to what you are trying to do that are in the marketplace.

For number one the purchase price is not even 1% or rents. Number two is you are mentioning skin in the game for the tenants and a 3 year contract.

If you go out longer than 1 year and a typical lease agreement you can run into all kinds of problems.

Number three if this is some kind of the tenants eventually own the property that is frowned upon a lot these days with the "Dodd Frank" rules that were put in place. Many investors do not want that liability and only finance investors now versus future owner occupants.

I don't really see how this is passive. I do commercial so zero interest in this. It seems an investor could just do this themselves with 20% down and buy their own property without this structure involved.

I am not really getting what is so great about the price, term, program, etc.

J Scott · Answer

Okay, that's a much better explanation of what you're trying to do...

If you could guarantee that the buyer would close in three years at the $139,900 price, and if you could guarantee there would be no out of pocket expenses for the investor other than the $665/month during that three year period, then the IRR on this deal is about 30%.  Which is great.

But, what happens when the buyer doesn't close (he can't get a loan, it doesn't appraise, he doesn't have the downpayment, etc)?

$900 per month on a $118,500 purchase isn't a good long-term rental property.  In three years, the buyer could do some serious damage to the property (not to mention normal wear-and-tear over three years), and the investor could easily spend all the "potential equity" ($20K) on renovating the property again.

In other words, the best case scenario is great, but the most likely scenarios are all pretty bad.

I'm assuming that the house is worth $139,900 when you're done rehabbing it -- why not just find a retail buyer at that price?  If it's not worth $139,900 after rehab, you're taking advantage of your lease-purchase buyer by trying to sell them the house at an inflated price.

Overall, the idea is good in theory, but not so much in practice.  Unless you can get a large fee from the lease-purchase buyer at the time he signs the contract...and then pass that fee to the investor who's buying the property from you.  The obvious problem there is that most lease-purchase buyers don't have a lot of cash to put down.

Joel Owens · Answer

J I think it is very confusing as well trying to figure out what they are talking about. Glad I am not the only one............. : )

Nathan Weaver · Answer

I think most investors on BP are looking for tenant-buyers too, but they aren't looking to be one. What is in it for the buyer? What passive income are you promising?

Tim FitzGerald · Answer

Am I wrong or shouldn't this kind of post be in the Market Place  ? I mean when you get the numbers right.

Nathan Weaver · Answer

I think most investors on BP are looking for tenant-buyers too, but they aren't looking to be one. What is in it for the buyer? What passive income are you promising?

Need an honest critique of my post and why I am not getting any leads or responses?

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