This most recent deal was really an act of not taking a property emotionally for me. I tried just about every scenario imaginable to make this deal work, but the numbers would always come up negative for me. Straight rent, owner-carry, refi, you name it, and I tried it. The problem is that the 15yr existing note just elevates the monthly payment so much that everything I've tried to do creatively just wouldn't work. I thought maybe taking Sub2, renting it out for going rental price, and refinancing in a year to a 30yr note would enable to at least make a profit on the backend, but even that went south - quickly.
I finally called the owner last night as promised and explained to her that the financials just didn't work out for me. I told her that I knew other investors that MAY be interested, but I couldn't promise her anything. She thanked me for at least trying, and I felt so bad, I told her that if it came down to crunch time and she absolutely HAD to sell it to please call me and I'd do whatever I could to help her out - even if it meant a loss for me (I couldn't believe I said this). She just sounded so kind in her communication with me in both phone conversations that I knew she would be easy to work with.
I'll try to fish her property to some local investors to see if anyone with strong cash reserves can help her out. I hope for her sake they can, but we'll see. Dang!
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I just wanted to add that another reason I am so "high" about this property is that it is situated in a prime location. It's about a mile from a new university extension, which I already discussed, but Round Rock itself is poised for a RE boom with several big corporations moving into town in the next year and a huge outlet mall opening in 2007. Prices on homes are expected to rise in the next year, and the new companies mean new jobs, meaning more people who need to own/rent.
(When will I let this property go!) ;-P
I would LOVE to use lease/options. Unfortunately, the great legislators of Texas passed a bill last year that came into law which pretty much outlaw Lease/Options (they make it an "executory" contract). I've heard from people who say there are ways around it (e.g., owner-carry), but I haven't heard anyone say how to still use L/O's with the new legislation. One person claims that the wording in the law makes the seller still use L/O's as long as the TB agrees to exclude all the new law's provisions regarding L/O's. I have an appointment with a competant RE attorney later this month, and this is one big thing I'm bringing up.
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