Is this a Fair Offer or an Unfair Offer?

So are you planning to do a sandwich lease option then?

This guy just wants to get out of the RE business. He has other persuits. So not a lease option, A buy and Hold with owner financing the deal.

So, the terms are what you offered? I think those are great terms if he'll accept. You're trying to get it lower than asking, so he might counter, but then again you can point out he's making money on the interest. You are also getting a property that cash flows with only 10% down, which is great. Just the kind of deal I like.

SOOooo the principal and interest is:
Payment P & I-----$142.40----- $273.41

And the rent is:
Current Rent-----$525-----$750

So you are cash flowing! And only paying 6% interest! Just don't forget taxes, vacancies and repairs.

I am purchasing my second rental (this week, yay!) for 25% down and 11% interest for 3 years with a balloon payment at the end of the 3 years. Just thought I'd let you compare. Mine is $30K with $700 rental income, my payments are $345. I just figured I would be able to pay off the balance within three years. I think your numbers are good, but you might have some alternate numbers worked out. If he counters, then you will be prepared. The more money down (or all cash), the higher the discount. The smaller amount of money down, the higher the price.

Of course, everything is negotiable. Have you made this offer? If so, how did he react?

It sounds like he is offering VERY fair terms already. Often, when they are willing to finance and give you a good rate, you are good just to accept his asking price, especially when it is below FMV in the first place.

Karen

I am searching for my first rental now. How do you figure the payment with a ballon payment in 3 years?

What would your monthly net be? With you scenario, I would only net $43. Are you doing better then that?

Hi Kareng,
No these are numbers I came up with. I was looking at his first house and he wanted to show me his second house. I asked him if he was interested in holding the not. He said to put some numbers together and we can discuss it. The renters are already in place. The asking prices are his numbers. All the other numbers are my numbers To offer to him.

Worth a shot.

The only financing I could find for my rental was a Hard Money Lender, so my payments are interest only for 3 years. This is the only lender I know that will finance a property UNDER $50K.

It would have been SO much better to finance for a longer term like your deal and have the principal paid down, but that's what I got. I got the property for such a cheap price that it worked for me, plus I needed a quick close from the wholesaler. I just have to make sure and put some money towards the principal in the next 3 years.

They gave me the terms and financed $26K at 11%, plus 3 points, plus taxes and insurance rolled in and an account servicing fee. My net is $355/mo. This will help my business cash flow and pay for marketing or something.

Your numbers are definitely worth a shot.