- Joined
- Feb 7, 2008
- Messages
- 94
Hi all, any suggestions and opinions would be greatly appreciated!
A friend of mine is currently renting in Port Moody. He has a 1 bedroom, 3 year old condo that the owners have had on the market for a few months without luck. The owners really need to sell it and he really doesn’t want to move so I am trying to think of a solution for him. He hasn’t ever thought about buying before and isn’t really interested in it; however, he is thinking about it now that he may have to move. The thing is he has poor credit and no down payment. So my first thought was doing a lease to own with the current owners.
My suggestion to him was simply sign a legal lease to own agreement with the owners for 3 years where he makes the equivalent of their mortgage payment, property taxes and strata for the term of the lease. At the end of the lease he has the opportunity to purchase the condo for a pre-agreed upon price. For example: they are currently asking $205K for the condo, a similar unit sold for $199K last month and the assessment is $182K. My (unprofessional) opinion was the value was somewhere between $180K-$190K based on comparables on the BC Assessment website sold last year (a majority sold close to BC Assessment.) So I suggested he agree to purchase the Condo in five years for $205K and make their mortgage, strata and property taxes until then. The benefit to the owners is their costs are covered and they don’t have to sell for less than they want as well as they benefit from the mortgage pay down while he makes the payments. The benefit to him is that he has five years to improve his credit situation and has the option to purchase a newer condo for what should be below market value which should allow him to purchase with zero down (if it’s worth $195K today and the market increases 3% per year for five years it will be worth $226K and $226K - $205K leaves him $21K below market.) Would the immediate equity position allow him to purchase with zero down?
Does this sound like a legal and legitimate option? Also, is it fair to say that someone with poor credit and no down payment is unlikely to be approved for a mortgage today? And lastly, can anyone think of any other options?
Thanks for your help!
Nick
A friend of mine is currently renting in Port Moody. He has a 1 bedroom, 3 year old condo that the owners have had on the market for a few months without luck. The owners really need to sell it and he really doesn’t want to move so I am trying to think of a solution for him. He hasn’t ever thought about buying before and isn’t really interested in it; however, he is thinking about it now that he may have to move. The thing is he has poor credit and no down payment. So my first thought was doing a lease to own with the current owners.
My suggestion to him was simply sign a legal lease to own agreement with the owners for 3 years where he makes the equivalent of their mortgage payment, property taxes and strata for the term of the lease. At the end of the lease he has the opportunity to purchase the condo for a pre-agreed upon price. For example: they are currently asking $205K for the condo, a similar unit sold for $199K last month and the assessment is $182K. My (unprofessional) opinion was the value was somewhere between $180K-$190K based on comparables on the BC Assessment website sold last year (a majority sold close to BC Assessment.) So I suggested he agree to purchase the Condo in five years for $205K and make their mortgage, strata and property taxes until then. The benefit to the owners is their costs are covered and they don’t have to sell for less than they want as well as they benefit from the mortgage pay down while he makes the payments. The benefit to him is that he has five years to improve his credit situation and has the option to purchase a newer condo for what should be below market value which should allow him to purchase with zero down (if it’s worth $195K today and the market increases 3% per year for five years it will be worth $226K and $226K - $205K leaves him $21K below market.) Would the immediate equity position allow him to purchase with zero down?
Does this sound like a legal and legitimate option? Also, is it fair to say that someone with poor credit and no down payment is unlikely to be approved for a mortgage today? And lastly, can anyone think of any other options?
Thanks for your help!
Nick
) However, this is the lowest priced (for its age) condo in Port Moody and would be the most affordable purchase on the market as well it suits his lifestyle. 
