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Birmingham Builder Leaseback

Posted by Powered by Simply Do It on November 15, 2021
0
Hello and happy Monday,
About this opportunity
  • House planned to be completed in June 2022
    • While the planned is to finish by summer of 2022 – delays may happen when dealing with new constructions
  • Builder will lease back for a period of 12-18 months and will use as a model home
  • At the end of the lease the builder will refresh the property and make it sale-ready
  • Builder will most likely increase price twice between now and summer of 2022
  • Price: $493,200 – expected selling price: $550k – $570k
 Bedrooms 4
 Bathrooms 3
 Square Feet 2422
 Year Built 2022
 Garage Size 2
Investment plan (subjected to changes)
  1. Make an offer and get under contract upon builder's acceptance
  2. Pay $4000 deposit
  3. Wait – until the house is ready for occupancy (~June 2022)
    1. No mortgage or payments are due until closing takes place
  4. Lease-back for a period of 12-18 moths
  5. Owner (you) will (can) sell at the end of the lease-back for a projected (not guaranteed) $50k-70K more
What's next?
 
Email/text for address, analysis and to get connected to Simply Do It's local team that handles this transaction.
Metro: Birmingham AL – community located close to Hoover AL
Team: Jordan
About the community
– Exceptional schools
– Trend-setting home designs with personalizing options
– Shopping, entertainment, and recreational opportunities all within moments away

FAQ
  • Do I need to make any mortgage payment until the house is ready?
    • No
  • Can I keep the house after the lease back is over with the builder and continue renting it?
    • Yes
  • Can I buy cash?
    • Yes
  • Are there any rent restrictions in this community?
    • Typically no but is is it best to make sure. there may be restrictions on short-term rentals.
  • Will you be able to help me sell when the builder ends the lease back?
    • Yes
  • Is there HOA?
    • Yes, builder pays for it during the leaseback. It is $1100/yr
  • If I sell after the lease back is over will I need to pay taxes?
    • Most likely yes, BUT you may consider a 1031 Exchange – to delay your due taxes.
image.png
Main floor
KS First Main floor.png

Second Floor
KS Second Floor.png


Analysis for the lease-back period

Financing Assumptions  
 Down Payment (%) 25%
 Down Payment Amount $123,300
 Financed Amount $369,900
 Interest Rate 3.40%
 Mortgage Term (Years) 30
 Monthly Mortgage Payment $1,640
 Cash Outlay (Total Out of Pocket) $132,550
Financial Assumptions Monthly Yearly
Rent (upper) $2,500 $2,500 $30,000
Rent (lower) $2,500 $30,000
 Property Tax Rate (Approx.) 1.00%  
 Property Taxes $500 $6,000
 Insurance $150 $1,800
 Repairs $25 $300
Variable-Cost PM 0.0%  
Property Management Fee $0 $0
 Leasing Fee 60% $0.0 $0
 HOA $0 $0
 Vacancy Rate 0.0%  
 Total Fixed Expenses $675 $8,100
 Total Expenses (Fixed + Mortgage) $2,315 $27,785


Financial Analysis / Deal Attractiveness
Years: 5 10
 Cap Rate 2.3% 3.2%
 Net Cash Flow $15,542 $42,946
 Equity Increase $157,843 $348,659
 Total Gain $173,385 $391,606
     
 Average Cash Flow/Year $3,108 $4,295
 Average Cash Flow/Month $259 $358
 Average Gain/Year $34,677 $39,161
 Average ROI 130.8% 295.4%
 Annual ROI 26.2% 29.5%
 Projected Property Value $669,159 $814,134


Disclaimer

Information contained herein was obtained from sources deemed reliable, however, Simply Do It and/or the owner(s) of the property make no guarantees, warranties or representation as to the completeness or accuracy thereof. The presentation of the property is offered subject to errors, omissions, changes in price and/or terms, prior sale or lease or removal from the market for any reason without notice.

The analysis is provided “As Is”. All the information is believed to be accurate (except for the small effects of some simplifying assumptions), but is not guaranteed, and depends on the values entered for the property. This analysis is intended for the purpose of illustrative projections. The information provided is not intended to replace or substitute for any legal, accounting, investment, real estate, tax, or other professional advice, consultation, or service. Simply Do It and/or the owner(s) are not responsible nor liable for any damages arising from the use of the analysis info. code Banks 1A


Thank you,

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