$100K Free & Clear Property - Posted by drew

Posted by David Alexander on June 02, 1999 at 17:48:51:

  1. Temporary hard money, offer him say half now half in 6 months. Get 35k hard money to buy the property and then sell with Owner Financing or retail.

You could then easily sell a note to get the 70k to pay off the hard money and other 35k.

Remember the longer your able to negotiate the longer your able to enjoy the cash flow.

David Alexander

$100K Free & Clear Property - Posted by drew

Posted by drew on June 02, 1999 at 15:46:12:

This is a question that came up in the chat room last night (while there were no paper experts in the room) that I would like to hear some ideas on:

FMV = $100K
No existing loans (F&C)
Seller wants $70K cash to let go of property

The person asking the question was thinking of going after hard money, but that seems like an expensive option. What would be some other creative ways to acquire this property and give the seller $70K cash??


Re: $100K Free & Clear Property - Posted by John Behle

Posted by John Behle on June 02, 1999 at 19:04:33:

Institutional financing is usually cheaper than discounted mortgages, which are usually cheaper than hard money loans.

So, at 70% LTV, the buyer should easily be able to get the loan needed. Sometimes this looks like getting a first for 80-85% of the sales price and then a second later. Some lenders will lend based on appraisal on a second, where very few will lend on appraisal on a first. That might mean putting some cash in until you finance it back out.

In this situation, you should also be able to easily create a note and sell it. Check with your local buyers and with Mike Morrongiello at American Note.

Hard money would be the third option due to the cost. A better form of hard money might be to find an investor with equity in a property and borrow that at a higher rate (but less than typical hard money) than he/she borrows it out at. It’s called “Equity Arbitrage”. There are several posts below and in the archives relating to it. In this case, you could also refer to it as a “Collateral Rental”.