Hi Sombo,

We would like to propose that we embark on a Joint Venture: fix up the property and sell it to a retail buyer in the spring, and share the profits.  If we put roughly $15,000 into the property (at our expense and under our management), we could probably sell for more than $300,000 in the spring.  Assuming the water damage is minimal, and your mortgage balance is under $220,000, even with realtor commission and closing costs, we should be able to net about $36,000 which we would split.

We are also open to doing a lease option, but again we would only enter into that if we could make the necessary repairs.  Otherwise, we’ll just attract only low-quality tenant-buyers, and we’re not really interested in that.

We have outlined the different proposals below.  It’s OK to say no to us.  Our goal is to make this a win-win for everyone.

A little background:  Before the house was rented out in 2012, you may recall that we felt that the property needed some attention/updating to command top dollar and high quality tenant-buyers.  That situation has not changed.  While the property does not appear to have suffered much additional damage other than general wear and tear, the exception is the water damage, the extent of which is unknown.

Carolyn reports that her water bill went from $50 per month to over $300 per month.  She said had someone from the water company come out, and he said there must be a leak somewhere and if she had it fixed they would credit her a portion of the bill.  It’s worth looking into.

In addition to a leak under the kitchen sink (which has damaged the floors which should be replace – not sure if the subfloor has also been damaged), there also appears to be a leak somewhere near the outdoor faucet in back of the house.  We could hear water running, even though the spigot was turned off.  We have turned off the water inside the house.  If we are to be involved with this property, we want to get a professional plumber out there to assess and repair the leak(s).  Once that is done, we will also get our inspector (at our expense) out there to assess additional damage.

The main unknown is the extent of water damage, and also what is the balance of your mortgage (or how much you need to net.)

As you know, we are coming into the holiday season, which is historically very slow.  Additionally, our schedules are extremely busy for the next couple of months, so the earliest realistic time we can foresee having the property ready to go on the market (for sale or for lease option) is February 1.

Unfortunately, we missed the opportunity to get Carolyn out several months ago so we could rehab and sell during the prime season, and now there is the additional unknown of possible water damage.

No matter what you decide, the garbage in the garage should be removed ASAP as we believe there may be some bags of food and it is starting to smell and may attract vermin.

 

 

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Kent House Punch List

Here are our repair recommendations to command top dollar (either for sale or for lease option) based on our observations and experience:

 

1. Fix plumbing (and related issues)
2. Clean roof
3. Replace misc. siding, insulation from water damage in back
4. New front door with sidelight
5. New garage door
6. Fix or possibly replace back slider door
7. Replace plastic awning in back
8. Interior paint – entire house
9. New flooring – entire house, except laundry and 2nd upstairs bath
10. New baseboards – entire house
11. New interior white six panel doors
12. Replace stair handrails
13. Refurbish cabinets
14. New or gently used appliances
15. Replace several light fixtures
16. New blinds downstairs
17. New bathroom fixtures in 2nd bath upstairs
18. Landscaping
19. Staging

 

 

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Proposals for Kent House

 

• Joint Venture fix up and sell
• First, must address water/plumbing issues:

i.      We will share costs for plumbing & related repairs up to $1000

ii.      If plumbing and water damage costs are more than $1500 (excluding new flooring in kitchen which we were already planning to do), we’re out.

1. We estimate approximately $15,000 in repairs (at our cost, see punch list, does not include possible water damage) to command highest sales price (estimate $300,000 if fixed up)
2. We will manage and pay for all repairs
3. We will contribute $900 per month towards mortgage payment during rehab and marketing period starting November 15.
4. Plan to have rehab completed by February 1 and begin marketing
5. After our expenditures (rehab and contribution to mortgage), the mortgage is paid, and all selling costs have been paid (realtor, excise tax, etc.), we will share in profits from sale
6. If we do not have a firm qualified offer by March 31, we take off market and Lease Option as outlined below.

 

• Lease Option
• First, must address water/plumbing issues:

i.      We will share costs for plumbing & related repairs up to $1000

ii.      If plumbing and water damage costs are more than $1500 (excluding new flooring in kitchen which we were already planning to do), we’re out.

1. We estimate approximately $15,000 in repairs (at our cost, see punch list, does not include possible water damage) to attract high quality tenant buyer
2. We will manage and pay for all repairs
3. Lease Option terms

i.      $1675 per month

ii.      $239,000 purchase price

iii.      Up to 5 year term

iv.      Rent payments from us to you would begin February 1, 2015

v.      You will get rent every month from us, won’t have to deal with tenants

vi.      You’ll get cashed out when the tenant-buyer exercises option

 

• Straight rental with cleanup only

1. Minimal additional cash outlay (would still need to address plumbing issue)
2. Would continue to be a rental
3. Monthly rental income estimated at $1600?
4. Continued wear and tear on property
5. Would require even more $$ when finally ready to sell
6. We would NOT want to be involved in any way