QUOTE (RedlineBrett @ May 17 2010, 09:13 AM) This is a dream scenario most REIN members will never come across... So good work on finding the deal!
Cash flow is not a problem for the seller because he has no debt to service on the property... But it should be front and center for you! Ugly seller financing can kill cash flow pretty quickly.
In order to make something work you are going to have to give the seller something he is not getting now. Since you are dealing with an investor that has obviously made some good moves I wouldn`t go too far until you get a better sense of why this person is looking to deal with you. Some questions.
1. Is the property worth 650k.
2. Does the owner manage it himself
3. What are the terms of the financing he is offering you? What rate, how long, what amortization.
4. How much cash does he expect you to bring to the deal.
With answers to those questions you will start to see your deal take shape. Your seller probably has a certain deal type in mind so don`t re-invent the wheel until you get their thoughts. I would start with a simple "How would you like this to work" and see what comes of it.
Thanks Brett.
Dream deal this certainly is. He is a very successful businessman, and is willing to `mentor` me along the way to reach my goals.
I asked him what he was looking for, and he said `bring me something`. I was thinking of offering the following.
agree to the asking price
give 10% down, and monthly payments at 5%, 35 year ammortization.
appraisal is actually 650k.
property is self managed.
I will still cashflow very well at these numbers
What I am not sure of is, how to do I exit this after 3 years so it makes sense for both of us?
I will be doing JV`s as well down the road, and he is willing to put up as much money as necessary if the deals make sense.
He doesn`t need to sell the property, he just wants to get out of residential, and stick to commercial.
Fairly loaded poll I know, but I want to make it right.
Thanks,
Jamie