THE DEAL

36 acres, 6 cabins next to national forest in western NC. (there's an "office building" on the property to that could potentially be upfitted to a 7th unit, but I'm leaving that off for the purposes of the numbers)

Asking price: $2.5M

Rent: AirDNA for the area + personal research = ADR $250 X 6 cabins @ 70% average occupancy rate = $380,000/yr potential revenue

The seller has been trying to FSBO the property for over a year at this point.

When initially contacted her she immediately said "I'm not interested in owner financing" before I even brought up any potential terms - so I'm sure she's been flooded with folks just spamming her with texts and emails not getting to actually know her and was sick of being asked. But to summarize what I learned from speaking with her:

1. This property was primarily used for family/personal purposes. She did have the property listed as a STR in the past but did not have any meaningful financials to share. It hadn't been listed since the pandemic.

2. Her motivation is: her extended family has migrated north, so she wants to replicate the property, just closer to family. Apparently they have already broken ground on the new construction, but are hoping to relieve the financial burden with this sale.

3. She is allergic to the term "owner financing." However I floated the idea of a lease option and she generally was open to a creative deal when I took the time to explain it to her.

I said something to the affect of, "I can't get a loan without financial history on the property, and as much as I'd like $2.5M in the bank to purchase in cash, I don't have that. So if you allow me to occupy the property and build up 2 years of financial history for you, I can get the loan and get you the money."

The main strategy I've talked with her about is a lease option - we agree on a purchase price today, and agree on monthly lease price, and length of the option.

So my questions are:

1. Knowing she's very opposed to anything close to "owner financing" do you think this is the best strategy?

2. Are there any terms you would be sure to include in the option? One term I'd like to add is, if the property doesn't appraise at the end of the option the option extends for 1 year. Or something to that affect.

3. How would you handle capital expenses in this situation? For example, everything is furnished, and its OK, but it has a "grandma's cabin" vibe (which is literally what this place was for her family) and they really need about $5k/cabin to be the best in the area (which would be my goal). Or additionally, how would you structure a roof replacement, etc? I'm planning on positioning this to her by saying "This deal can be a gradient scale where you retain more control and also more liability, or we receive more control, and take on more liability, where on this scale would you be most comfortable?"

4. As far as additional reasonable terms for the sellers benefit to make her feel safe do you have any suggestions? If I can make her feel secure on the terms I think this will go through. I believe she trusts me personally now, as much as one can after talking for a couple weeks. And my wife and I are meeting her in person this weekend (hence this post!) which I'm very confident will win her over with who we are as people. But the terms need to feel good to her too.

Anything else I'm missing?

Western NC, North Carolina

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