Hi All,
I want to run this deal by you for a couple of reasons:
- To see if this is a good deal or not.
- To see if how I compute the numbers makes sense from an investors standpoint.
Property:
- Sales price $171k
- FMV $205k-230k (didn't have rapid price appreciation, so not so bad market)
- Single Family home in Idaho Falls, Idaho.
- 2630 sq feet - 1315 up, 1315 down
- 4 bd / 3 ba
- Currently under L/O for 2 years for sales price at $191k with rent credit of $200
- Some repairs might be necessary but less than $1k/year
- Available takeover of existing financing of $107k @ 6.5% I/O
Computation:
- Make the assumption the place will be purchased
- Putting 20% down
- L/O has a 6%/year appreciation kicker - that is the price goes up 1/2% per month
- The option consideration is counted as part of the income divided by the number of years of option
- Option consideration and rent credit is taken off of the return when sold
- Makes assumption that there is no vacancies as tenant/buyer is in place
- Rent will be increased $25/year (although not in Spreadsheet)
- Note the income is almost all from the option consideration.
Questions:
- If the seller was agreeable to either a L/O - that is you would L/O for less than the current tenant/buyer or an outright purchase, which would you choose? Why?
- What counter offer would you make? Why?
- Do the numbers in the enclosure make sense?
- How would you change the spreadsheet to make it more clear? (if I Incorporated, I will give you the updated excel sheet)
Thanks,
Glen
http://www.lulu.com/gfullmer -Financial Spreadsheets
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