Birmingham Builder Leaseback
- 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 |
- Make an offer and get under contract upon builder's acceptance
- Pay $4000 deposit
- Wait – until the house is ready for occupancy (~June 2022)
- No mortgage or payments are due until closing takes place
- Lease-back for a period of 12-18 moths
- Owner (you) will (can) sell at the end of the lease-back for a projected (not guaranteed) $50k-70K more
– Exceptional schools
– Trend-setting home designs with personalizing options
– Shopping, entertainment, and recreational opportunities all within moments away
- 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.
| 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