A Potential Deal but...Property Manager

[Curtis H.]

Hello BP,

So there is a home that I looked at today that is available for lease. It was shown to me by a property manager. It looked like a classic case of someone who accidentally turned into a landlord. The home needed some updating, DIDN'T have a dishwasher or a hook up (first time I saw that), etc. House has been unrented for a month at a decent price. Unusual for this market. I did a property report and all that came up for loan info was that it was a $0 Grant Deed in 2001 and the seller was Veterans Welfare Board. Sellers seem in their 80s at least so we may be talking family members here.

I want to see if the seller is open to selling on a lease purchase where I guarantee rents for 2-3 years and then buy them out at the current market value of the home. No realtor commission and no repairs on their part, and I get a home without having to immediately get a loan. Or I could simply sublease it and get a $300 spread and whatever option money I can collect from a tenant buyer.

I am hesitant to tell this to the property manager for obvious reasons, but I have no info on the owners unless I skip trace them. I can guarantee the prop manager that if the owner approves I will cut him a check for his "first month's rent and his 8% for this year". Looking at about $5K to have him on my team and it would be worth it if they said yes, and he would have a lot of influence on that decision I bet.

What would you do? Skip Trace or team up with prop manager?

[Curtis H.]

@Elizabeth Colegrove

Ok that was my initial thought. The hesitation was because my plan is enticing to the owner because of the property manager being out of the picture. They are paying him first month rent ($2500) and 8-10% of monthly rent ($250/m). So really they are only collecting $2250 net profit per month on a home that could fetch $2700 easy with some sprucing up. If I guaranteed them $2400 per month for 3 years, and have the first option to buy them out with say 50% rent credits if I do, that would be a winning situation for the owners. Especially if I'm taking care of repairs. This is of course if they are motivated to NOT be landlords and want to cash out. I would only do this if they allow me to sublease of course. That way if I find something better, I will just turn around and do a Rent to Own with a tenant buyer whom will give me option money on top of higher rents.

I just want to make sure my thinking isn't off :-)

@Brian Gibbons

What ya think?