- Joined
- Nov 3, 2014
- Messages
- 47
Hello Everyone,
I've recently acquired a new client wishing to do an RTO with me and as this is my first RTO deal, I was hoping I could get a second or fifth opinion on my prospect.
My client went through a divorce several years back while he was in a lower paying job and his credit tanked hard as a result. He has since found a much better paying job (grossed $185,000 per his 2015 T4) and has started paying off his debts and improving his credit. His credit score currently sits at 610. His credit report shows a few past due statements but the latest was back in 2013. His pay stubs, references, and employment checks out. He appears serious about this as he wasted no time in getting me his financial documents.
He has $17,000 ready for an initial option payment. The caveat is that he wants to limit his monthly rental cost to $2000 per month. Based on this, and dividing it by 0.006, gives him a price limit of ~$330,000 which he is ok with. As the market is not doing so well in Alberta lately, I decided to charge him an interest rate of 3% annually for a 2 year term giving me a final price of ~$350,000. Including mortgage pay down during that time, I will net approximately $38,000 on the deal so about $19,000 each for myself and an investor if I go that route.
Any thoughts on the matter would be greatly appreciated.
Thank you,
Phil
I've recently acquired a new client wishing to do an RTO with me and as this is my first RTO deal, I was hoping I could get a second or fifth opinion on my prospect.
My client went through a divorce several years back while he was in a lower paying job and his credit tanked hard as a result. He has since found a much better paying job (grossed $185,000 per his 2015 T4) and has started paying off his debts and improving his credit. His credit score currently sits at 610. His credit report shows a few past due statements but the latest was back in 2013. His pay stubs, references, and employment checks out. He appears serious about this as he wasted no time in getting me his financial documents.
He has $17,000 ready for an initial option payment. The caveat is that he wants to limit his monthly rental cost to $2000 per month. Based on this, and dividing it by 0.006, gives him a price limit of ~$330,000 which he is ok with. As the market is not doing so well in Alberta lately, I decided to charge him an interest rate of 3% annually for a 2 year term giving me a final price of ~$350,000. Including mortgage pay down during that time, I will net approximately $38,000 on the deal so about $19,000 each for myself and an investor if I go that route.
Any thoughts on the matter would be greatly appreciated.
Thank you,
Phil