Lease Purchase Opinion?

[Alan Day]

My wife and I are new to investing in buy-and-hold properties and I wanted to ask the opinions of those more seasoned than we are. I have connected with a wholesaler who finds motivated sellers, gets the property under contract and then connects with an investor offering a Lease/Purchase assignment for a fee of $2,500 + $1,000 closing costs ($3,500 to wholesaler on assignment).

The property is a 3/2 with FMV of $110,000 and rent of $1,000/month. The lease purchase is $100,000 with $5,000 down = $95,000 amortized over 25 years and a 3 year balloon. Analysis shows perhaps $300/month cash-flow.

Does anyone have any opinions if this is a good investment?

[Darren Smith]

Alan. I've tried several options of using lots of different estimating websites (Zillow, trulia, abcrealestate, realquest, tax value, etc). Bottom line is nothing compared to looking at actual MLS comps. I've been off up to 20% of ARV (after repair value) compared to MLS. Even if my estimates from the multiple websites are accurate, it doesn't matter to buyers if there are no comps in the MLS to validate the value. The main thing the websites are missing is if there is anything the seller paid at closing that wouldn't show up in the sale price.

As far as getting MLS access, there are sites I've heard of, but not having used any I'm not going to mention them. Your best option is to make friends with or see how you can assist a realtor, and eventually see if you can become their "assistant" to share their access. That's how my partner did it.