Posted by Brian_Wa on July 09, 2008 at 09:11:47:
How do you figure it having 50k in equity? If it was listed for a long time without being sold, then it’s not worth 200k at this point. Based on what I can tell, it’s not worth more than 165k right now for sure. I wouldn’t use more than 145k as the current market value.
You need to be careful with this one cuz you’re speculating way too much here.
Brian
great deal, but need help…how to finance? - Posted by JR
Posted by JR on July 08, 2008 at 19:45:25:
…I want to purchase a beautiful house in downtown Indianapolis in an historic neighborhood and across the street from a park that was completely renovated and added onto (800 sf 1br to an 1800sf 3br). It has original and historic woodwork, tile and hardwood floors, but also modern granite counters, dual appliances, dual showers and sinks with custom tile work in the bathrooms, as well as a two-story deck with downtown skyline views.
The house recently appraised for just over $200k and the owners are leaving for the UK in a little over a week with plans to use a management company to rent it out for about $1200/month. The 6 month listing just expired with the final asking price of $165k. I tried to work a lease option with the owners, but their “wants” were unreasonable as it would have been cheaper to rent the property and have no risk than to L/O the house.
The owner flatly told me if they had an offer of $160k cash they would take it, which was when it was listed, so figuring about 10% for commissions and closing costs means they would’ve netted around $144k. Now, I suspect with a cash offer and quick close the owner would sell for even less.
As it stands, there is about $50k in equity, but a new on-ramp to a major interstate is being built just 1 block south, which will provide easy access and dramatically improve the value, as will the increasing rejuvenation in the area and the presence of a nationally known company (where I work) two blocks away.
Conventional financing is out due to the fact that I am going through the process of cleaning up an identity theft, but I do have another idea. I would like to live in the property for at least two years so that the RE market can recover a bit and the property will appreciate. Also, the on-ramp will be complete, which will also drive the price upwards. Lastly, I want to be able to avoid any taxes on the capital gains by making it a personal residence. During that time, conservatively, the price should increase to at least $215k, which would give about $65k in equity.
If I could find a private equity-based lender, I would be willing to pay monthly interest payments and then an equity split upon the sale of the property (or refi if I wanted to keep it), so they would receive good monthly cash flow AND a healthy chunk of cash after the second year, which could be tax free.
Therein lies the problem, I do not know any private lenders. Any ideas or suggestions? This would be lucrative for everyone involved. Thanks for any input!
Re: great deal, but need help…how to finance? - Posted by Natalie- VA
Posted by Natalie- VA on July 10, 2008 at 05:51:38:
I’m with Brian. It’s worth less than 165k now.
–Natalie