Lease Option from a Tired Landlord
Investment Info:
Condo other investment in Goleta.
Purchase price: $200,000
Sale price: $250,000
Purchased a condo on a lease-option and then sold it on the same day I executed my option (double escrow), about a year and half later.
What made you interested in investing in this type of deal?
Low risk opportunity
How did you find this deal and how did you negotiate it?
A co-worker and the bank I worked for owned it as a rental and his tenant literally drank herself to death in the living room. Her body wasn't found for 3 days and there were maggots in the carpet from her decomposing body (sorry, but it's true). He had a new baby and didn't want to deal with cleaning up the property and finding a new tenant, so I offered to lease it with a two-year option to buy at the current market price.
How did you finance this deal?
I financed it with a lease option agreement, no money down other than typical rent deposit.
How did you add value to the deal?
I replaced the carpet, and painted the interior.
What was the outcome?
Sold it for a profit of just less than $50,000.
Lessons learned? Challenges?
Executing the option and selling the same day was more challenging than I had anticipated because my buyer's lender added a last minute condition that the buyer "hold title" for 48-hours before funding. Luckily the seller agreed, but he could have refused and I would have been in a very difficult position.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I negotiated the lease-option without an agent, but sold it with an agent. It was too long ago to even remember who I used. But the seller is still at the same bank, we're still friends, and if you need an owner occupied loan on an "in-park" manufactured home in California, he's the man. Ask me for a referral.
