OfflineA person contacted me with a three unit apartment all
with renters on board. She whats to lease option.
She would sell the property for 160k, owes 108k
the units has positive cash flow. I'm just starting
out an have not done a lease option yet. any input?
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Do your due diligence on the property to see if the selling price is right( do comps), check the condition of the property and make sure when all the monthly expenses are paid you have an good cash flow and then if you like what you see and it makes sense go for it, Jim
jbischoff
What State is this property in?
Jah knows all things ...
With multiple units, you would be doing a master lease option, where you control all 3 units and make one monthly payment to the seller. Check the existing financing on the property. You have to pay particular attention to cash flow, maintenance, and vacancy more so than when you do a single family home since you won't be getting any option money up front from the tenants. So if something goes awry, you need some cash reserves to handle it. You need to check the cap rate and see if there is room for rent improvement. Your upside in this deal is monthly cash flow and appreciation of the property. Cash flow is critical in order for you to be able to hold the property and take care of the monthly payment, vacancy and maintenance. If you re doing a single family home and the tenant buyer moves out, you get to keep the option money and find another tenant buyer. In this deal, if you have 2 vacancies in one month, you have no option money to fall back on and still have to have the cash reserves to make the monthly payment until you get new tenants with at most, a security deposit. Multi unit master lease is a different animal than single family homes, a little more risk.
It's in New Hampshire. town has factory and from research big rental area. tks
Two of the three units rented are at the correct rate. the third had lots of room to
go up. Thank you all so much for info..it give me a great starting point. The taxes
in New Hampshire land are high. But it can be reviewed in Apr.tax now is $6000 per year. Right now it's cash flow is $2050 per month. it should be about $2500.