1st deal..need help quick!! - Posted by Misty

Posted by Michael Morrongiello on May 22, 2000 at 22:40:01:

You may have a deal here that can be worked several ways:
Find out what terms you & he can work out for an owner financed sale? (Sales Price if owner financed, how much cash down from you, the note interest rate, amortization term, payment, etc.)

TIP: Try to also negotiate a CASH price or discounted payoff amount on the owner financing if you are able to pay off your seller in a year or less from the time of sale. You’ll see why this might be important later…

If those terms are favorable, and acceptable to you then go for it. If you STRONGLY feel the home can be sold for $70K or more it would seem you have picked up some equity here. However equity does not put food on the table , CASH FLOW does. If you do close on the home you can now go to the following exit stratergies:

  1. Sell it yourself with owner financed terms at a higher sales price and interest rate on the financing and create a “wrap” monthly spread income position. The payment coming in to you will be greater than what is going out to your seller who you are obligated to pay. Once this note is seasoned a little bit (the more seasoning the better- now do you see why the tip above comes into play?) you can then still sell this “paper” off at a discount to a note funder (we would have interest) to convert to CASH, you would then retire the other debt owed to the seller and the cash would above and beyond this would be yours.

  2. Lease it with an option to buy to a prospective tennant buyer and have them give you some cash up front as an option deposit, plus pay you monthly rent so that you cash flow. If they excercise their option in the future then you get cashed out

  3. Just keep it as rental and rent it for positive cash flow and equity build up over time.

Do your homework on the value, estimate the repairs, and move quickkly if it all checks out.

To your success,

Michael Morrongiello

1st deal…need help quick!! - Posted by Misty

Posted by Misty on May 22, 2000 at 17:59:59:

Ok. I sent a letter to an out of town owner on a home vacant for several years. Turns out it’s an inheritance. New roof, carpet, flooring. Needs alittle linoleum and ceilings painted. He called saying he would be interested in selling or OWNER FINANCING!! Down payment and monthly not important just want someone in it. 2 or 3 bdrm. 2 ba. 1300 sq ft, barn, 11 acres, view of lake, appraised at $76,000 will sell for $50,000 with payments no more than $400.00 mth. for 15-20 years. This is an excellent deal. Is my best bet to get the financing from him and lease/option to another owner? and if I needed the cash I could sell the note? I figured I could easily get $70,000 lease/option for 15 years at 11%int. 5000 down or could sell for all cash. (He didn’t mention an interest rate or down) What would my legal obligations be with this deal? Either the lease/option or sell for cash? Need to act fast, someone else interested but only in house and 5 acres, he wants to sell it all!!! HELP!!!

Re: 1st deal…need help quick!! - Posted by Lynnie G

Posted by Lynnie G on June 07, 2000 at 10:32:56:

Most all the RE programs advise that the first one to set a price/terms loses. Ask what he would NEED in terms and rate. Have a figure you’re comfortable with in mind. He may suprise you and ask for LESS than you would accept. Case in point I bought a property with partial owner financing and thought I would be happy if the seller would want 9% interest rate. He offered 6% interest rate. It would be easier to negotiate down from his terms than it would be to negotiate down from what you offered. Good luck.