Re: Potential Real estate deal - comments appreciated
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Another thing. What's your exit strategy?
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Yes, this is the biggest problem with the deal that I can see. I would buy this with the intention to hold it long term since it would be such a good money maker each month. The problem that I can see is that the area is such that any future investor that is serious will recognize the inherent tenancy issues with the property. I've got two sex shops accross the street and a strip club about 2 blocks down. Not really conducive to a family environment. Tenancy is likely to remain highly transient. Most of the time I like to buy mobile home parks that can be made into communities. Thats not an option for this property. Any serious investor will immediately see this problem.
Another problem is that I think that its going to be kinda tough to find a bank that is interested in financing the property given its mixed use. Plus, most serious investors will probably not like the mixed use anyway. These issues highly limit the pool of future buyers that will be interested in the property. This is a very difficult issue, and I'm still not really sure of the answer.
In sum, I know that I'll keep the property long term. I just don't know how I'm going to be able to sell it later on.
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If he accepts cash, do you flip or keep?
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I'd keep it for income. See above.
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I like the owner finance approach but why are you voluntarily giving him 6.9% interest? Since when does a motivated seller get to have 6.8% interest?
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mmm...good point, and normally I would agree. Actually, I considered this issue and decided to offer the interest in order to better differentiate the lease/option offer from the seller finance offer. All the offers are good, but the offer I want him to take is the lease option. I can make the most money with the least risk with the l/o deal. Would you disagree with my thinking?
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