All Forum Posts by: Curtis H.

Ok I guess. We agree to disagree on this one.

I asked the PM, and once I KNEW he didn't deliver the message and was lying, I went around him yes. I still don't get how that was behaving badly.

Regarding the legal part, I get that completely. If the owner sold me out and didn't go to bat and say he never got the offer, I'm screwed. So I can still ask for proof NOW that they are done with the PM at least right?

@Account Closed

I disagree with behaving badly. I asked the question here on BP and someone gave the advice to go through the PM. I did exactly that and the PM lied like a rug, like I knew they would. I even offered to "take care" of them if I bought the property. They didn't bite so I found the owner myself outside of the PM, and once I made contact with the owner technically their agreement was over according to the seller.

As far as how it would play out legally, I agree that puts me in a defensive position. I also came at this deal as a owner occupant, not an investor, and I think that's very different. I'm just a guy looking to live in a house. Not sure if that would work, but that's the way I could play it since it's the truth.

But again, you have me thinking about this and trying to find out about this. I could always have a third party call the PM and ask if the property is still available to rent. See what THEY say.

@Brian Gibbons

I will surely take a look. I need all the help I can get. Thanks for that.

@Account Closed

Good question. I don't know for sure, but I do know that it has not been rented in at least a month, and maybe more. It's no longer on the market from what I can see so who terminated who, I'm not sure. But you bring up a good point because I don't trust the seller at all. How would I go about knowing that for sure? Or if I make him an offer I just put in the contract that I am not responsible for any commissions, etc?

@Brian Gibbons

Ok I totally get it on the fly zone now. I still personally don't care but resale value is a concern so that will have to lower my offer more than I thought, which is ok with me.

On the thinking that sucks, well fine then if you want to be that way :-)

I agree though. Although I have a couple rentals, I never really had to negotiate and do a back and forth with a seller, so I'm new at this. I have a way with people where they really like me when they meet me so I'm confident this will be one of my strengths in time.

Thanks for the sample script with the seller. This will help. I feel like I have the upper hand slightly in this situation. This seller won't market correctly to rent or sell so I feel like someone like me is his best shot so I may get my price.

So first step is comps and title, then make an offer. I have my work cut out for me.

@Brian Gibbons

Good point on the 90% for buy and holds. I should have caught that.

On the fly zone, I don't really care because I'm not living in this thing long term I don't think. I just need something to live in NOW because paying $25K a year in rent is not cool. I totally plan on upgrading to a better area after a few years. As long as the noise doesn't penetrate the double pane windows, I'm not too concerned.

Brian I'm glad you brought up comps. This is where I get paranoid. I don't have relationships with any realtors yet, and I flat out don't trust that if I don't already have this deal under contract that it may not be passed on to an investor they know will close. Same thing with an inspection. I'm sure whomever I get referred to knows other investors. Am I being overly paranoid here?

I doubt he would take Sub2 without getting significant cash up front. Seems like that's what he wants more than anything. He doesn't seemed concerned with a long term vision.

@Brian Gibbons @Mark Reynolds

So update on this one...

Talked to the seller last night, and this thing is turning out nicely so far. He seems more motivated than last conversation, and a lot more accomodating to my needs. I was more of the authority in this conversation and said "Although renting for a few years then buying is not off the table, I just don't see any benefit for me without negotiating the price now and getting any rents toward purchase price".

So I basically told him that I would get an appraisal/inspection next week, and make him a cash offer. He was all ears and perked right up. He wants to get paid and he wants it now. So I'm going to try and give it to him. At 70% ARV minus repairs. The house is in decent shape, but not retail sell-able shape. I will use that in negotiation. It's in a fly zone. I will use that too. He won't be paying a realtor. I'll use that too. My gut says if I make him an offer at $450K or more, he will jump on it because he needs the cash.

If he accepts anything under $500K, at the WORST I could assign the contract to a buy and hold investor that doesn't need a big spread. This area is crawling with them.

Do I do a title search or inspection/appraisal first?

@Brian Gibbons

Noooo. I will not rehab a lease option. No way. Not until I own it.

I think I will offer to buy it cash. He will likely "want" to hold out for the big payday as they all do.

So what would be my next step here in knowing what to offer? Appraiser? I would be lying if I said I'm not worried they may tip off another investor. And they can find the owner just as easy as I did with a simple skip trace service. In fact the owner likely will want to be present so the connection can be made there.

If you guys jump in and say that you have not heard of that happening to anyone, then I'll stop being paranoid. But you are talking about an area with $50K paydays on FLIPS. So yeah, people get real shady out here.

@Brian Gibbons

I would love to, but he already stated that he wants to sell it cash. Of course, that's what most people "want". I'm beginning to think with this guy I'm over complicating it. Seems like I should offer my price, he gets cash now. OR... his price, I get terms. Anything else and I would need a good lawyer to protect myself and some Advil.

He wants to make it look pretty and get $600K for it two years from now. But he has no money.

I want to buy it NOW at say $460K, or on terms at $500K. With some work it can be worth $550K-$575K easy in this area. These numbers aren't in stone of course.

How would I go about getting reliable comps on this and still protect the deal with no contract? I'm too afraid to give anyone the property address because this area is swarming with investors willing to overpay for appreciation. I don't trust realtors (sorry) and appraisers know a ton of investors. Part of me says get it under contract with 60-90 day close and flip it to one of these overpaying investors and be done with it. I just don't know what to offer.

@Brian Gibbons @Elizabeth Colegrove @Mark Reynolds

So this deal is not dead just yet!!!

Guess who calls me today? As I suspected the property manager lied about giving the owner my offer. Owner responded to my letter I sent him after skip tracing the address. He said and I quote, "Nah I aint got no fax from him". In fact this deal is very much alive because the property still is not rented and the property manager is out of the picture. I get the feeling the owner is desperate, but trying to hide it. Since I offered money up front to secure the deal, he made a comment "since you have $15K laying around how about you give me a year rent up front and I'll reduce the rent by $350/month. I said hell no pretty much but that statement made me think he thought I was well off because I had $15K cash. That means he probably does NOT have a lot of cash and needs some. I since motivation but again, he's hiding it.

I need some advice. And before you tear my offer apart, remember I am not experienced and this house is for me to live in.

My deal in the letter was this...(He declined Offer 1 which was owner financing.)

Offer 2) I buy the home from you on a Rent to Own basis. I basically buy the home at FULL MARKET PRICE, and make payments like I was renting, but I have 5 years to pay you off. A portion of my rent will be applied toward the purchase price. I would of course cash you out by getting a loan from the bank or just pay cash. I can give you $7K up front to secure this offer. If I don’t pay you off in 5 years, you keep the $7K! The benefit there is I will still be paying you rent for 5 straight years and will take care of the home like it’s mine, not like a renter.

So the owner was willing to do this, but on a 2 year lease instead of 5. Ok fair enough, I'll convince him to give me 3 and we are good there. Here are the two things he wanted that I don't like...

First, he does NOT want to negotiate the purchase price now, but when the lease is up. He was hell bent on that, meaning he is banking on appreciation and trying to buy time with a renter, and he's trying to make me that renter. So I feel like if I stick to my guns, and the house continues to stay unrented, he will be extremely motivated when that next payment kicks in.

Second, he does not want to give any type of rent credits, or have any of the money paid during the lease go towards the purchase. He also didn't go for the "I'll pay for all repairs so no need for a property manager" bit. He said he didn't care about that. Now I know things have changed with rent credits so that's probably not the way to go anyway, but it seems to me, again, like he just wants a renter. Why the hell would I give him $7K up front, and I get no extra benefit in return other than being a renter?

My gut tells me he is, or soon will be, motivated due to the home sitting for going on two months now. However, I think if he had his way, he would say yes to the offer, let me rent for two years, and sell the first opportunity he could for all cash (because he said that's what he wants) if there wasn't an ironclad contract preventing him from doing so.

So my thought is this...

1) Give him my Lease Option terms take it or leave it. $7K option money, 3 year lease term, Negotiate price NOW, some type of rent credits or other concession, I cash him out within 3 years.

2) Get an appraiser to see what the home is worth in current condition, and offer him 70-75% ARV minus repairs all cash and get private money to help fund the deal. I have a feeling if he's motivated enough he will take the all cash offer. He seems like he needs the money.

He gave me a week to give him an offer because "there are other people interested". Yeah ok.

Thoughts?

@Mark Reynolds

Well the house seems to have been rented, so I am assuming he did not want to sell and just wanted to rent it out (or the address I had was wrong). That address was an hour away one way, so I'm not sure I want to do that for a guy who wouldn't call me back in the first place. Moving right along.

This was all very good advice though. I think next time I will invest in better skip tracing to get a valid phone number to gauge motivation.