Cash Now, Cash Flow, Cash Future...

I am almost to the point where I am looking at a house a day. I had a meeting with a great prospect yesterday and got really creative with my offer. It was a total rush. Hard to put into words the satisfaction of having all the study & struggle finally come together.

Details:
Existing mortgage of 75,000 with a 750 monthly pmt.
Current tenant pays $1350/mo and the rent hasn't been raised for 2 yrs. Could get 1450-1500.
Current tenant's rent is being paid by a trust and is auto-deposited into the landlord's account every month like clockwork. Never a late-pay.
Seller wanted to get 190k for the property.
Tax assessed value $240,000.
Realquest.com: $207,000
E-appraisal.com: $192,000

I gathered this info over the phone and after looking at the quick math ($190k-75k= 115,000 rough equity) and applying my rule of:
"If there is equity, GO!"
I set the appointment.

I'm getting my presentation down pretty well now. We reviewed the state of the local market, the national market and what the seller was hoping to do by selling this house. We went over the reality of selling a house, especially a rental where the balance of cash flow vs price is so critical to getting a quick sale.

He was really stuck on getting his price, so we discussed the concept of the different types of cash...

• Cash now: most people think of when selling a house. It is the large lump sum at closing.
  

• Cash flow: regular monthly pmts/income from a property
  

• Cash Future: similar to cash now, only waiting for the lump sum until some date in the future.
• Cash Flow Future: Regular pmts starting at some date in the future.
  

After reviewing the three types of cash I went over what my offers would be. My cash now, all cash offer was 133,400. Best case, most cash offer. It was too low for him. I knew that, but offered it anyway. Cash costs money (interest/points/holding costs) so my offer was low for those reasons.

However, if he would be able to wait for some/all of his cash for 3-5 years... I could get much higher on the price. Say... $175,000.

He liked the number & asked more questions about how it would work.

$75,000 underlying mortgage taken subject to.
$10,000 cash now at closing to the seller.
$90,000 cash future to the seller in 3 yrs (no interest, no pmts)
$175,000 offer price.

Since he would have a big tax consequence in the future with the $90,000 pmt in 3 years, we discussed the option of him taking cash flow/pmts at that time.

The seller really liked the higher offer price, but needed to compare it to his other offer of $145k from the ugly house people. Since I was planning on wholesaling the deal and this is still my first contract, I didn't push for a signature on the spot and agreed to follow up with him on Monday.

I suppose I should have had him sign a contract anyway & made it cancel-able in 3 days or something like that, but I didn't. Maybe next time. Cut me some slack, it's my first time...

I'm looking to wholesale this one. An investor buyer would need to come up with $15,000 cash plus closing costs (10k to the seller, 5k to me) and would have a positive cash flow of roughly $500/month with a 100% pay tenant. Sweet.

I ran it buy my mentor and he really liked the terms. He said he'd buy it as long as we got a good termite inspection.

So I've got that going for me.

Which is nice.

-Taylor