A Real Paper DEAL! Any suggestions? - Posted by DougB
Posted by DougB on April 08, 1999 at 12:15:57:
Got a call 2 days ago from homeowner that has a balloon for $31,643.15 due 5-1-99! He’s paying $400/month @ 9.75%. I called the note holder, who is an investor, and she will not discount the note or take partial cash. Really no reason to, but it doesn’t hurt to ask, because the property FMV is $70,000 and I’m sure she would love to take it back. The owner wants to keep the house because he is improving it and adding a garage. He has talked to the local banker and the banker suggested they take out a home improvement loan. The owner doesn’t want two payments. I suggested refinancing the home, but he for some reason wasn’t interested in that idea. Both he and his wife work, he is a self-employed carpenter she has a clerical desk job. He said they could afford $550-600 a month payment. My idea is to pay cash to the noteholder for the contract for deed and write up a new C4D for 96 months at 9% interest with payments starting at $550 the first year and increasing $25 per month each year. The last year’s payment will be $750 per month. I put the numbers in my new HP19BII using the cashflow menu and come up with a 17.54% yield, which gives me a 10-point spread. Of course I will eventually try to get the homeowner to payoff early, which will increase my yield.
Any other CREATIVE ideas or suggestions?
Thank you in advance for your suggestions.