Market Conditions in Denver>Question Details

brock_monica, Home Owner in Denver, CO

How is Denver market for Lease Purchase contract?

Asked by brock_monica, Denver, CO Sat Feb 16, 2013

Cannot sell my townhome (owe $10k more than its worth) and having trouble getting it rented out, even at a rental price $200 below the mortgage payment. It has sat empty for several months even with property management oversight. Is a lease purchase a good option? Trying not losing money every month, be it by sitting empty or rented out

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8
Robert McGuire’s answer
Brock_Monica,

This is a tough situation. A lease purchase still may not satisfy your needs or solve your negative cash flow. There is a Trulia agent named Byron Self who specializes in Lease Options. You migh want to have a consultation with him. Otherwise, another option is to cut your losses and do a 'short sale'. If you need help with that or have questions, contact me.

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes Thank Flag Link Fri Feb 22, 2013
http://www.boulderrealestatenews.com/?p=714 - Blob discusses rent to own pros and cons. For seller, in current market, rent to own is not a good strategy - you will be leaving CASH on the table. As for your empty rental property, there is a strategy to get that rented tomorrow: Reduce your asking price on rent. I can discuss a good strategy idea if you give me a call.
0 votes Thank Flag Link Thu Feb 21, 2013
I am looking for a lease purchase. I would love to know more about your townhome. Please contact me at mrspeer1@gmail.com.

Thanks,
Matt
0 votes Thank Flag Link Sun Feb 17, 2013
Monica,

You raise a couple of questions...

1.) A lease purchase on your townhouse? Note that this is something that as a Realtor we don't have a Commission approved form to do a contract, so therefore you would need to have an attorney come up with a contract between you and tenant to do a lease purchase. Make sure you have a sizable deposit as you are at risk with the tenant not taking care of your property.
2.) With our current market~ you should have a Realtor give you a value of the property as we have very low inventory and pricing is going up at this point.
3.) Property Management~Sounds like you need a good person, I can certainly recommend someone. Rents continue to increase as the market demand is high and inventory is low.

So let me know if I can be of any help!

Bill Pearson GRI, SRES |"Your Denver Realtor For Life"
ERA Herman Group Real Estate| 201 Columbine Street| Suite 301| Denver CO 80206
720-329-1470
Bill@DenverRealtorForLife.com
5280 Magazine FIVE STAR Real Estate Professional – 2010, 2011, 2012
0 votes Thank Flag Link Sun Feb 17, 2013
How do you know that your townhome is worth $10K less than what you owe? Have you tried selling it with an agent in the last 30 days? You might be surprised what you can get for your townhome on a straight up sale right now. Record low inventory and a huge influx of buyers within the last month have home prices skyrocketing. Let me know if you would like an updated home evaluation done at not charge.
0 votes Thank Flag Link Sun Feb 17, 2013
Both of the answers below have very good information. If you would like to pursue renting the townhome I have been having very good success finding renters in a short period of time. I put together a web site for the home with a virtual tour of the property, do extensive advertising, plus will meet the potential tenants and do a background check. Perhaps this active approach will find you a renter. I would be glad to discuss the option with you if you are interested.
Kayla Okafor, MBA
Denver Real Estate Connection
Owner/Employing Broker
Ofc: 303-455-0244
drckayla@aol.com
0 votes Thank Flag Link Sun Feb 17, 2013
Congratulations for thinking outside of the box Monica. One thing to remember that a Lease Option and a Lease Purchase, although often used interchangeably are actually two different alternatives to a traditional rental agreement or sale. Typically with both a Lease Option and a Lease Purchase a portion of the down payment or monthly rent payed by the Buyer is credited toward a predetermined purchase price of the home at some point in the future. With a Lease Option, a Buyer simply has the OPTION purchase that home at a specified time.The Buyer can still forfeit any agreed upon credits and move one. However, with a Lease Purchase, along with the Lease you would complete a Colorado Real Estate Commission Buy/Sell form or another form prepared by an Attorney with your Tenant/Buyer that has a specific closing date and details of the sale of the home agreed upon in advance of their moving in. Lease Options can be great options for both a Landlord and a Tenant. I know many former hardworking Homeowners, who lost their homes and desperately want to own a home again. Lease Options and Purchases give them an opportunity to work toward that goal. Meanwhile, the Landlord has the possibility of a Tenant with a little more skin in the game. Please have either a Realtor or a Lawyer (preferably both) look over your documents before entering into such an agreement so that you are properly protected. We wish you great success!
0 votes Thank Flag Link Sun Feb 17, 2013
The answer to your question is really contingent on the exact amount you need per month to be satisfied with the investment. Because it is sitting empty, you are taking a significantly larger hit than you would be if it were being rented for a portion below what you owe per month. This significantly large monthly hit, multiplied by the amount of months it has been empty may easily exceed the amount you owe on it. In this situation it would make more sense to consider selling out right. If you could hypothetically rent it, than you need to realize that if the tenant does agree to some lease to purchase option, it carries little to no legal weight. The situation gives the tenant an option to opt out very easily from buying the home.

ryanfagin@kwrealty.com
0 votes Thank Flag Link Sat Feb 16, 2013
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