All Forum Posts by: Bill Wilson

@Rick Baggenstoss The rental agreement was signed first, and the LO was written to supersede the Rental agreement. The rent is $2,600, which is the mtg plus $230, and it's market rate for a 40-acre property with a barn and 3bd 2ba house. If he had paid the rent on time (before the 3rd), he would have gotten credit toward the purchase price, but he's never done that either(he doesn't pay until the 15th). Not that Rocket Lawyer replaces a good RE Attorney, but they had a LO contract for Colorado which I used. When he showed up without the option money, we made a handshake deal that I would give him a little time to offload his properties, but he said they were going to be gone in a couple of months, that was a year ago. Now I'm done waiting. I told him without the option fee, it reverses back to a regular rental, and I have no plans to terminate that. However, because the main function of the option fee is to pay for the privilege of locking in the price at today's value, without it, I will be raising the price to reflect the current valuation.

All of that said, I think he's a good guy in a tough situation, and I told him that I would be happy to discuss a new deal that gives us both some value.

Background

I'm not a RE Investor, but I have a tiny bit of concept knowledge. This situation is a bit over my head.

Sep 21, I moved to Texas from Durango, CO, for work, I had been trying to sell our house for months, but we needed to move, so I decided to rent it or lease option it. We found a Brady bunch family moving from San Antonio to Durango who was interested in the lease option. We agreed to the terms, packed up, and got ready to leave. I drew up a 3 yr rental lease and a 3 yr lease option contract, and we signed both. When the guy showed up, he did not have the $10K option fee. He was trying to sell his two homes in the SA area but was having to deal with probate issues on both. I needed to go, so they moved in, and we headed out. Fast forward to the present, after bugging him several times, I still don't have the option money, and his probate issues still are not resolved. He has paid every month, but I just emailed him to notify him that because the option fee was never paid, he is only on the rental agreement, and if they wanted to lease option the place, we would need to void the current agreement and draw up a new one. He is admittedly upset because he'll receive no purchase credit and loses the price lock, but I explained that he hasn't held up his side of the agreement. 

Deal I'd like to propose

One of his homes in SA should be out of probate by the end of the month; he finally has a hearing date. The other, in New Braunfels, is under contract and should close at the end of April. My house has gone up in value from $490K to $590K, I owe $430K, and I have $177K in equity. I'd like him to give me credit for my equity in his SA house, which I believe he owns free and clear and is worth $390K. I would let him take over my mortgage (which is $430K at 3.125%) using subject to or some other option, and he would seller finance the balance on his house to me, then I could assign it and get my $177K in equity out now. Otherwise, I'd have to wait until the end of the lease to sell, Sept '24. He is still having credit issues, and with the higher interest rate, he doubts he could get financed and isn't sure he'll net enough to buy outright even if I honor the $489K price. They have adult kids to pay out of the proceeds 1st.

Help

Any suggestions on how to put this together? Are there any issues I'm not thinking of that could be problematic?

My Durango house LO price was $490K, and the Current price is $590K

His SA house is $390K

The equity delta is $177K to me

Thoughts?

I really appreciate any help you can provide.

@Brian. It is in Summit County very close to Keystone. HOA provides a shuttle in ski season. The dues are $670 a month though...ouch. He owes $440,000.

@Tevis. We were going to try option 4 with a 60 day close but we're a bit nervous because if we can't find a buyer we would have to walk. I don't want to get that reputation just starting out. Plus I don't think he will allow any contingencies if he sells to us for under $500,000. He might not even allow the 60 day close.

Thanks for the great advice guys. Seller financing may be an option but I would want to be able to sell it still which I am not sure you can do in that case. I can't afford the carrying costs on my my own.

Wendell and Dev, thank you both for the advise! I had some concerns about the Resort aspect of this as well so I double checked the numbers and time frames with another local agent. He confirmed everything so I think we are going to pursue this the way Wendell described. I will keep you posted as we try to negotiate the price with the seller.

Thanks again!

Best,
Bill

Let me start by saying I am new to this and even though I have been educating myself as much as possible; I might not recognize a good deal if it clipped me in the head with a sledge hammer. I may be equally as likely to jump all over something that I should not have touched because I'm anxious to get my 1st deal under my belt. So any advice would be appreciated!

Here are the details:
- It's a 3bd 2ba 1760sqft twnhse in a ski area.

- It doesn't need any repairs and it's fully furnished.

- The owner is in his 70s and lives out of state. He can't use the property any more and he is motivated to sell.

- The local Realtor ran comps and said they run from $610,000-$700,000, FMV is $620,000, the 30 quick sale is $550,000.

- The average time on market is 120 days.

- The Seller offered to sell for $510,000 without any negotiation so I'm sure he'd go down farther with a real offer.

- My target would be $460,000-$475,000. He does owe $440,000 on it.

I'm working on the funding but I'm considering trying to get a 60 day close and option it off so I wouldn't need to sweat finding money. I'd have to include an escape clause just in case I couldn't find a buyer.

Would you work this deal? If so what exit strategy would you employ?

- Flex option contract, find a funder willing to do an equity share of $620,000, ...or drop it like a hot rock and run.

Thanks in advance.
Bill

Let me start by saying I am new to this and I might not recognize a good deal if it clipped me in the head with a sledge hammer; and I would be equally as likely to jump all over something that I should not have touched.

So here are the details:
It's a 3bd 2ba 1760sqft twnhse in a ski area. It doesn't need any repairs and it's fully furnished. The owner is in his 70s and lives out of state. He can't use the property any more and he is motivated to sell. The local Realtor ran comps and said they run from $610,000-$700,000, FMV is $620,000, the 30 quick sale is $550,000. The average time on market is 120 days. The Seller offered to sell for $510,000 without any negotiation so I think he'll go down to $490,000, maybe lower. He owes $440,000 on it.

I don't have funding yet. For that matter I am not sure what I would do with this.

Would you work this deal? If so what exit strategy would you employ? Equity share with a funder, assign the contract, ...or drop it like a hot rock and run.

Thanks in advance.
Bill

@K Thanks. There may be more to the story as far as distress goes but this is what I got from a brief conversation. I will press them a bit more when I call back this week. I have the impression there is more there than the seller was comfortable revealing on the first call.
Otherwise I think you're right. They should try a regular SS, cash for keys, or DIL

@J I'm thinking there will be some rehab since it was built in 97 and it doesn't sound like much has been done to it since. It's in a fairly exclusive area near the ski resorts so I would likely need a buyer looking for a second home/vacation/retirement home. We would have to market it in those circles. Also it could be subdivided and built into 4 10 acre plots
I sent the home to my partner so we'll see what he says.

Thanks for the great advice!!!

@K The guy is a builder and built the place in 1997 for a customer who backed out of the purchase. He and his wife moved in and have lived there since. They were in foreclosure a year ago and came into some money so they paid current ut now they have missed several payments again and just got the NOD. They would like to avoid having a FC on their record so they are motivated. No BK yet

@J, I may have someone that can partner and buy it short but we couldn't list it and start marketing it until after we completed the purchase and waited the 15 day holding period required by Colorado (and that's if the lender doesn't have some longer anti-flip holding period addendum). The upside is we don't have to disclose to the bank that we plan to resell but the downside is we would be sitting on the property for a minimum of 30-90 days and that's if we got a good deal on it. (say 70-80% FMV)
Does that sound about right?

Thanks Guys. Sounds like short sales are buy hold or fix flip only then. That what I originally had been looking at them for anyway.

Bummer these are nice people, with a nice place that's just going to end up back with the bank. Any other option short of winning the lotto and buying it?