Posted by Chris(Indiana) on August 18, 2003 at 19:04:37:
Hello Christen,
I am actually in the same boat. I was going to do owner financing and then try a simultaneous close. I found most of my buyers weren’t good enough for that. Too low of credit scores. Not enough down…etc.
I still plan on doing it but I’m L/O the home for one year. But because I also need to cash out I am going refi to pull out some cash and do another deal. I get some option money up front. Some cash flow for a year and then at the end of the year if my buyers credit still isn’t good enough to go to the bank I can still create a mortgage and the hope is is that with a years worth of on time payments at the residence I should be able to sell the note for 90% LTV.
That last part of course I am still crossing my fingers on. But at least my short term problem was solved. I just didn’t feel like waiting endlessly for the just the right buyer to come along.
1st Rehab not selling what to do? - Posted by Christen
Posted by Christen on August 18, 2003 at 17:39:35:
Well I just completed my first rehab.
purchase price $30K
repairs $15K
Appraisal $70K
My husband and his father are contractors and did all the work themselves. Ran an a OWner Financing, got a million call and a million showings. 1st attempt was to create a note and sell it. With such a low note amont I got a bad cash out rate. After the 80% LTV and 87% buy out I would end up with 47K. and a 15% second which really does me no good I have to cash out. At this point I’d be thrilled with 60K.
I’d be happy to go FHA And pay all closing costs and prepaids but it seems all my buyers weren’t credit worthy or job worthy. do I just have to run the ad again and wade through the junk ones?
Oh I’m hooked up with a great mortgage broker, I can even pull credit from home but didn’t know i finding someone FHA-able is possible.
Try sending a postcard mailing to about 3000 people around the subject property. The postcard should highlight the house and the price and terms. Expect to receive around a 1-1.5% response rate. This should yield around 40 calls. Out of that you should find a few interested parties and probably 1 or 2 that can qualify for a loan.
This is the second house I’m trying this on. The results have been pretty good.
Ask for more money down to recoup the rehab costs, and get a new loan…
Just a thought…L/O’s in my area move in days, instead of months. I know this is not the case in all areas, so do what works in your area. This works in our area.
You can find a bank that will do 80% LTV on NOO, so you can get all of your money back out, and get the option money.
Re: 1st Rehab not selling what to do? - Posted by jasonrei
Posted by jasonrei on August 18, 2003 at 22:33:23:
I’ve got a deal like that, gonna just take the 2nd. Sometimes the price is “right” and still no buyers. My big prob is the title seasoning thing. Getting offers with good nets, but the lenders want 12 months.
Best I’ve come up with is keep advertising and wade through the junk. Sometimes you’re better off with a second mortgage. Holding costs can turn a nice deal into a real loser.
Re: 1st Rehab not selling what to do? - Posted by JohnP SFL
Posted by JohnP SFL on August 18, 2003 at 19:17:26:
Christen, how long have you been marketing the property? You say that the appraisal is $70K? Did you run comps? Maybe you are priced to high or even to low? Figure on a 6 month holding to get the property sold. I hope this helps