Advice and ideas needed to struture this deal. - Posted by Dave J

Posted by Bruce Barilar on July 11, 2002 at 22:35:39:

dave, if you have good credit, etc. I would go down to my local banker and ask for a commercial loan, interest only to pay off this guys first + 13,000 + closing + some 10,000 NOW cash in your pocket. They would be at 55%LTV. Have your seller then carry a second for what you owe him 34K. Use your own title company to do the documents. You should be able to close quick if you use a local portfolio lender (small bank).

Advice and ideas needed to struture this deal. - Posted by Dave J

Posted by Dave J on July 10, 2002 at 14:57:33:

owes 46K
Buyer needs 13K now but is willing to carry back a second for the remainder of his equtiy.
According to my mortgage broker she could get me a 90/10 non-owner occ loan but my down payment would be based on the purchase price of 93k not on 10% of the 1st position note that they would hold? Is this normal? Can I do better? Also the my debt to income ratio goes to high with this property on my credit so they would have to have a signed lease agreement for the place to write the loan. I don’t see the advantage of using the seller financing if I have to put down the 10% of 93K no matter what. I was hoping to turn around and lease option the property but if I can’t get the financing squared away than I might just have to pass. The owner is still willing to work with me. He needs to sell this thing quick because than he can qualify for his capital gains exclusion. I suggested a straight option at 93K with the right to show the place and find a tenant who will sign a lease agreement and then wait till I close on the place. He is willing to let me do that. Any advice is appreciated.

Re: Advice and ideas needed to struture this deal. - Posted by Nate(DC)

Posted by Nate(DC) on July 11, 2002 at 14:35:01:

If he has to wait for you to secure a tenant to rent it and then buy it, his capital gains exclusion may run out. I am not sure how much time he has (presuming he lived there for a while and then has been renting it for a few years…thus the time crunch before his “two of the last five years” exemption runs out), but he actually has to have the property SOLD by that date, not merely under contract to you, or in a lease-option, to get the exclusion. I would think seller financing would be the way to go since he can sell immediately without waiting for a lender, and he is willing to wait for everything but $13K. If you can’t find $13K you will need to get a partner who has it or you can’t do this deal.

Good luck,

Re: Advice and ideas needed to struture this deal. - Posted by Cal, Balto

Posted by Cal, Balto on July 10, 2002 at 22:27:06:

Hello Dave:
In this case it would seem a delayed settlement with the right to possession and an assignable contract would be the way to go. Lock the owner up in a contract of sale giving you possession and the right to operate the property before you close. With a lease option you get expenses from the moment you take possession. Delayed settlement contracts usually make the owner responsible for the expenses until closing just like a regular contract of sale. Make the contract assignable and put an ad in the paper. For a quick sale offer seller contributions for settlement. When you find a buyer assign them the contract for a fee (the difference of what you paid for it and what they are buying it from you for minus any contributions or expenses). You didn’t say what kind of equity was in the property but no matter what doing it this way will keep your cost and “in” money to a minimum.

Good Luck and Happy Investing

Cal, Balto

Re: Advice and ideas needed to struture this deal. - Posted by Mattman

Posted by Mattman on July 10, 2002 at 21:13:38:

in the financing biz we always go on sale price or appraised value whichever the less when it comes to down need to ask more questions of your broker before you go and pull a deal off. yes everything you finance is going to effect your end debt ratio. if this guy will play ball and let you show the home and make a deal thats the easiest way and least expensive.