Home Buying & Selling Tenant in Place? Here’s How to Turn It Into a Selling Point

Tenant in Place? Here’s How to Turn It Into a Selling Point

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People are part of every transaction, but in recent cases we have added an inherited lessor and that lessor to the package. We were really pleased to keep them in this multi-structured property as we used it to sweeten the buyer’s deals.

Property: LakeView

The Connecticut property, called LakeView, is the main residence or villa and is named because it offers stunning views of the lake. The seller used it as a second vacation home that was nationwide from his main residence.

The house contained a legal suite in law downstairs. There was also another garage on the premises, above which was a one-bedroom suite, which was rented by a family friend overseeing the rest of the property.

Related: How to find an additional $ 400,000 in two properties

Transaction Summary: LakeView

The seller inherited everything as part of the family’s trust, but distance and life events motivated him to sell it. This transaction stands out over average terms because principal and monthly payments were top-loaded.

In the way this was configured with the buyer, I got a lot of suggested profits in advance from the three paydays. It happens in transactions, but I think it’s only about 10 percent of the time due to the high down payment (payday 1) that is prepaid or over time.

The details of LakeView are as follows.

Purchase price: $ 399,000
monthly: Payment of $ 1,000 principal only x 48 months
sale: $ 429,900 (Monthly lease = $ 1,750)
Payday # 1: $ 80,000 (For the first two years, $ 20,000 upfront every 6 months and 3 more $ 20,000 payments)
Payday # 2: $ 26,000 ($ 550 / month spread (rent minus $ 1,000 / month for seller and insurance payments)
Payday # 3: -$ 2,000 ($ 30,000 markup + $ 48K for principal repayment – ​​$ 80K payment)
total: $ 104,000 ($ 80K + $ 26K – $ 2K)

The LakeView property was in a high tax rate area, but for the sake of clarity, we’re giving the buyer tax, so the total monthly purchaser’s total is about $ 2,750, of which $ 1,000 is tax.

Related: Lease Agreement: What if I have an existing tenant?

Icing above: Inherited borrower

Do you remember that second structure? It turns out that the seller had a family friend who lived in a unit above the garage and was paying about $ 700 a month for rent.

We met him. He was a wonderful person and was interested in staying at the accommodation.

Real estate investors looking at demographic data

We communicated this news to the buyer. The buyer will eventually inherit the tenant. We explained that they wouldn’t be able to receive that rent after their net $ 20,000 came in, so at that point it turned out that they had $ 40,000 in the deal. rice field.

It added some incentives in time for them to meet their rent (part of the criteria for reaching the point of receipt of the deposit) and generated $ 700 more cash flow each month until the time was reached ($ 104,000 above). Will not be calculated) Take over them.

Since the tenant is a source of income and is actually another payday, after paying a second down payment of $ 20,000, he agreed to hand over the rent and hung the carrots to the buyer. This happens 6 months after the transaction.

Over the last six months, we’ve actually raised $ 700 a month from that tenant for a total of $ 4,200, bringing the total profit of the LakeView property to $ 109,000. Yes, it’s a 6-digit profit, even after the negative payday number 3. This is an impressive deal.

In the aftermath, we talked about the selling price of $ 429K and the terms of the sales review. I felt I was able to test the market more. However, by completing the transaction in three weeks, I was able to move on to the next transaction with a certain degree of security.

Imagine what a 6-digit profit transaction will bring to you in a few years! Treating real estate as a business and establishing an effective system is unheard of, but it requires working hard and wisely.

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Do you have questions about the above transactions? Do you sell conditionally? Why or why not?

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