by Hope
I need to preface this post. This all happened before the housing decision was finalized, but I am anxious to hear this esteemed audiences perspective on this proposal I sent in so I can learn for the future if this opportunity every presents itself again. We are staying in our apartment until April 30th. After that, the world is our oyster!
With that preface, a few weeks back as I was searching for rental homes I stumbled upon a very unique house sale at least in my mind. It was a brand new modular home on 1.5 acres about 30 minutes from where we live ie what should be a cheaper area to live. Here’s the kicker…it was new in 2008 and had never been lived in and had been on the market for over a year. And on top of that, the ad said the owner was willing to do owner financing.
So I sent an inquiry, the agent called me back almost immediately. We went to see it the next morning. 3 bedrooms/2 1/2 baths with 650 square foot of unfinished 2nd floor space. Perfect for us. It was definitely new on the inside with a stock kitchen and definitely 8 years old and neglected on the outside. A power wash and gutter cleaning would have done it good and the two wood porch/patios definitely needed to be treated before they rotted away. And from that you can imagine the yard and rock driveway condition.
You get the picture…it was listed at $260,000. Whoa! If you are paying for location…well, the location definitely left a bit to be desired…in the middle of nowhere, unpaved road and surrounded by unkempt mobile homes and tiny old shoebox homes. (Not judging, just trying to paint a picture.)
When the real estate agent spoke to the owner he said he was willing to be creative with owner financing. I saw that as a positive sign. I went home and decided to give it a shot. I certainly wasn’t willing to pay $260K since that was what we paid for our last house it and it in a MUCH better location, upgraded in many ways and only slightly smaller. So here are numbers I put together of what I was willing to do.
| Payment | Balance | Rent to Own Pymt | Finance Charge to You | Total Finance Charge to You | Purchase Price | Amt to Down Pymt | Balance of Down Pymt | Date | Annual Interest Rate | | | | | |
|---|
| 1 | 175,000.00 | 1,000.00 | 200.00 | 200.00 | 174,000.00 | 800.00 | 800.00 | 10/15/15 | | | | | | |
| 2 | 180,525.00 | 1,000.00 | 200.00 | 400.00 | 179,525.00 | 800.00 | 1,600.00 | 11/15/15 | 3.75% | | | | | |
| 3 | 179,525.00 | 1,000.00 | 200.00 | 600.00 | 178,525.00 | 800.00 | 2,400.00 | 12/15/15 | | | | | | |
| 4 | 178,525.00 | 1,000.00 | 200.00 | 800.00 | 177,525.00 | 800.00 | 3,200.00 | 01/15/16 | | | | | | |
| 5 | 177,525.00 | 1,000.00 | 200.00 | 1,000.00 | 176,525.00 | 800.00 | 4,000.00 | 02/15/16 | | | | | | |
| 6 | 176,525.00 | 1,000.00 | 200.00 | 1,200.00 | 175,525.00 | 800.00 | 4,800.00 | 03/15/16 | | | | | | |
| 7 | 175,525.00 | 1,000.00 | 200.00 | 1,400.00 | 174,525.00 | 800.00 | 5,600.00 | 04/15/16 | | | | | | |
| 8 | 174,525.00 | 1,000.00 | 200.00 | 1,600.00 | 173,525.00 | 800.00 | 6,400.00 | 05/15/16 | | | | | | |
| 9 | 173,525.00 | 1,000.00 | 200.00 | 1,800.00 | 172,525.00 | 800.00 | 7,200.00 | 06/15/16 | | | | | | |
| 10 | 172,525.00 | 1,000.00 | 200.00 | 2,000.00 | 171,525.00 | 800.00 | 8,000.00 | 07/15/16 | | | | | | |
| 11 | 171,525.00 | 1,000.00 | 200.00 | 2,200.00 | 170,525.00 | 800.00 | 8,800.00 | 08/15/16 | | | | | | |
| 12 | 170,525.00 | 1,000.00 | 200.00 | 2,400.00 | 169,525.00 | 800.00 | 9,600.00 | 09/15/16 | | | | | | |
| 13 | 176,221.24 | 1,200.00 | 250.00 | 2,650.00 | 175,021.24 | 950.00 | 10,550.00 | 10/15/16 | 3.95% | | | | | |
| 14 | 175,021.24 | 1,200.00 | 250.00 | 2,900.00 | 173,821.24 | 950.00 | 11,500.00 | 11/15/16 | | | | | | |
| 15 | 173,821.24 | 1,200.00 | 250.00 | 3,150.00 | 172,621.24 | 950.00 | 12,450.00 | 12/15/16 | | | | | | |
| 16 | 172,621.24 | 1,200.00 | 250.00 | 3,400.00 | 171,421.24 | 950.00 | 13,400.00 | 01/15/17 | | | | | | |
| 17 | 171,421.24 | 1,200.00 | 250.00 | 3,650.00 | 170,221.24 | 950.00 | 14,350.00 | 02/15/17 | | | | | | |
| 18 | 170,221.24 | 1,200.00 | 250.00 | 3,900.00 | 169,021.24 | 950.00 | 15,300.00 | 03/15/17 | | | | | | |
| 19 | 169,021.24 | 1,200.00 | 250.00 | 4,150.00 | 167,821.24 | 950.00 | 16,250.00 | 04/15/17 | | | | | | |
| 20 | 167,821.24 | 1,200.00 | 250.00 | 4,400.00 | 166,621.24 | 950.00 | 17,200.00 | 05/15/17 | | | | | | |
| 21 | 166,621.24 | 1,200.00 | 250.00 | 4,650.00 | 165,421.24 | 950.00 | 18,150.00 | 06/15/17 | | | | | | |
| 22 | 165,421.24 | 1,200.00 | 250.00 | 4,900.00 | 164,221.24 | 950.00 | 19,100.00 | 07/15/17 | | | | | | |
| 23 | 164,221.24 | 1,200.00 | 250.00 | 5,150.00 | 163,021.24 | 950.00 | 20,050.00 | 08/15/17 | | | | | | |
| 24 | 163,021.24 | 1,200.00 | 250.00 | 5,400.00 | 161,821.24 | 950.00 | 21,000.00 | 09/15/17 | | | | | | |
| 25 | 168,294.09 | 1,300.00 | 275.00 | 5,675.00 | 166,994.09 | 1,025.00 | 22,025.00 | 10/15/17 | 4.00% | | | | | |
| 26 | 166,994.09 | 1,300.00 | 275.00 | 5,950.00 | 165,694.09 | 1,025.00 | 23,050.00 | 11/15/17 | | | | | | |
| 27 | 165,694.09 | 1,300.00 | 275.00 | 6,225.00 | 164,394.09 | 1,025.00 | 24,075.00 | 12/15/17 | | | | | | |
| 28 | 164,394.09 | 1,300.00 | 275.00 | 6,500.00 | 163,094.09 | 1,025.00 | 25,100.00 | 01/15/18 | | | | | | |
| 29 | 163,094.09 | 1,300.00 | 275.00 | 6,775.00 | 161,794.09 | 1,025.00 | 26,125.00 | 02/15/18 | | | | | | |
| 30 | 161,794.09 | 1,300.00 | 275.00 | 7,050.00 | 160,494.09 | 1,025.00 | 27,150.00 | 03/15/18 | | | | | | |
| 31 | 160,494.09 | 1,300.00 | 275.00 | 7,325.00 | 159,194.09 | 1,025.00 | 28,175.00 | 04/15/18 | | | | | | |
| 32 | 159,194.09 | 1,300.00 | 275.00 | 7,600.00 | 157,894.09 | 1,025.00 | 29,200.00 | 05/15/18 | | | | | | |
| 33 | 157,894.09 | 1,300.00 | 275.00 | 7,875.00 | 156,594.09 | 1,025.00 | 30,225.00 | 06/15/18 | | | | | | |
| 34 | 156,594.09 | 1,300.00 | 275.00 | 8,150.00 | 155,294.09 | 1,025.00 | 31,250.00 | 07/15/18 | | | | | | |
| 35 | 155,294.09 | 1,300.00 | 275.00 | 8,425.00 | 153,994.09 | 1,025.00 | 32,275.00 | 08/15/18 | | | | | | |
| 36 | 153,994.09 | 1,300.00 | 275.00 | 8,700.00 | 152,694.09 | 1,025.00 | 33,300.00 | 09/15/18 | | | | | | |
As I saw it, at the end of three years, I would have paid him a total of $194,694 for the house including interest on the balance, a courtesy fee for financing and principal payments to be applied as down payment when I went to finance it through a traditional mortgage.
I want to caveat the “lease” payment and how it was broken up as courtesy fee to him and application to down payment was based on a conversation with my dad. Evidently he sold a home many, many years ago in a similar fashion in a similar situation as far as it being on the market for a long time…and he said he was forced to pretty much go with what they offered as far as how much was offered towards the principal. I don’t know if that still applies today but figured it was worth a shot…the worst they can do is say no right?!
I know this is quite a bit lower than he is asking. So aside from my starting number of $175,000, what are your thoughts on this proposal? I am sincerely interested in hearing constructive criticism on this type of arrangement and proposal.
And here is the email I sent with it…although I am not certain the real estate agent would have passed this on.
I chose the original purchase price based on comparable sales in the area of modular homes on similarly sized acreage, tax records, the condition of the home and the surrounding area. I am open to any counter offers, of course.
The lower payment during the first year would allow us to bring the outside up to standards, professionally finish out the attic for the needed 4th bedroom in for our family, install an Invisible Fence for our animals and install what is going to be a higher priced high speed internet system (traditional cable and dsl is not an option at this time based on my research.)
You will note that in addition to an annual finance charge, I am willing to pay an additional portion of each month’s rent to the owner for the great blessing this would be to our family. The remaining lease payment as detailed in the spreadsheet would be applied toward the down payment at the end of the lease term.
The goal, of course, would be to purchase the home outright via traditional financing as soon as possible; however, I have included details for up to 3 years of this lease purchase agreement. All of this would be pending a home inspection, well/water testing, septic inspection, termite inspection, etc. of course.
Since this would be a lease purchase…a little about us. I am a single mom who has been self-employed for right at 10 years now. I have very steady income and am happy to provide proof of that as well as business references. In addition, I am a foster/adoptive mom. Over the last 6 years, I have had 9 foster children in my care. Two years ago, this October, I finalized the adoption of 15 year old twins who were placed with me when they were 12. It was at this point that we outgrew our old home in James City County.
We have 3 dogs, 1 cat and volunteer/train dogs at the Heritage Humane Society twice weekly so there are times we have an extra dog for a day or two as we get them started. I know animals scare people as far as leases go, but I can provide numerous references for our animals, and the home we leased for 4 years (with the animals) sold in 4 days after we moved out. All that to say is that we take care of our home.
Just a side note, our home is inspected annually and sometimes monthly if there are foster kids in the home by the social services staff. I am happy to provide references to that end as well.
The real estate agent called me the next day and simply said “the owner is not even interested in countering” which was fine. I was at peace with giving it a shot and seeing what happened. But I am interested if this opportunity presented itself again, what I could have done differently or better.
