Posted by mike on May 27, 1999 at 13:22:20:
Bud,these notes being created is what I have been wanting to learn. I have been asking around as to where I could buy a book or course that would explain how to create these purchase notes. could you please lead me toward such material. Thanks Mike
Advice Needed Now! - Posted by Dean and Joan
Posted by Dean and Joan on May 26, 1999 at 07:35:59:
We are interested in purchasing a 3bdrm. 1 bath home in the country. This home is in immaculate condition. Brand new plumbing, a/c, and septic. The owner’s mother is elderly and can no longer live alone. He is somewhat flexible. He would like some cash up front on the deal. The house has been on the market for a couple of months. We meet with him on Thursday at 4:30. We have no money to put down and we want to rent the house for $650 in a rental market that is wide open (there are 25-100 calls on any rental listed in the paper in our area.) The asking price is 69,900. The house appraised for 65,000 before he added the new a/c and septic, etc. He spent $7,000 making these improvements. So, he originally had it priced for 72,000. There is nothing owed on the home. We just got our CS course on Monday and are working through it. However, we have known about this house since before it was put on the market and we want to try and make a deal on it before someone else gets it. We were thinking of trying to do a lease/option. Any other suggestions if he won’t go for that? TIA Dean and Joan
Re: Advice Needed Now! - Posted by Bud Branstetter
Posted by Bud Branstetter on May 26, 1999 at 16:25:04:
In looking at the owner’s(who is the owner) motivation there only seems to be the need to move them to a retirement establishment. Unless you can help them there what do you have to offer. They want cash to put in the bank to pay x dollars a month for the retirement facility. If you can figure out a way to get them that monthly you may be able to get them to carry the financing. If they would need 1500 a month then you would have to create or buy a note that gave that cash flow.
Bottom line is that he does not seem motivated at this time to sell below market. Without a price concession I don’t think CS reccommends buying.
Split fundings - Posted by David Alexander
Posted by David Alexander on May 26, 1999 at 13:11:57:
Make split funded offers, I do this all the time and it works well for motivated sellers.
Read the success stories, specifically the one by Alex Guerivich, maybe someone knows the URL.
An offer maybe something like
52,000 with 26k now and 26k in two years.
Re: Advice Needed Now! - Posted by Redline
Posted by Redline on May 26, 1999 at 13:11:03:
I totally agree with Phil below … there is presently no deal where this guy is looking for anywhere NEAR $69,000. The fact that he’s been for sale for MONTHS spells that out. He’s in dream world. Don’t join him.
Forget about the appraisal - I don’t totally trust them. Do comps on this property. What’s the house REALLY worth? If you don’t know - ask a realtor to run some comps and let you know. My feeling here is he’s overpriced and you need to get a good discount on this property to make sense. And it doesn’t sound like this guy is motivated enough yet.
Good luck and keep us posted,
RL
Re: Advice Needed Now! - Posted by phil fernandez
Posted by phil fernandez on May 26, 1999 at 08:44:28:
If the house appraised at $65,000, it’s value would not increase by adding a new septic and air conditioner. A house is expected to have a workable sewer system. And if you live in a warmer climate the house would be expected to have a good air conditioner. These were repairs that the seller had to make to his property. It’s his cost of owning the house. When the house was being offered at $72,000 and there were no takers at that price, the market has spoken.
If you can not get a lease option from the seller you might be able to convince him to owner finance it. If he asks for a downpayment and you have none you could pay the down in monthly increments above what the monthly mortgage payment would be until he has received the amount required as the down.
Example - Posted by Bud Branstetter
Posted by Bud Branstetter on May 26, 1999 at 16:52:30:
As an example of what type of note would have to be used.
Buy price(should be below market) $65,000 nothing down.
At 7% and 1500/month you would pay off in about 50 months
You may be able to sell for $70,000 and $5,000 down. At 80% you could raise $56,000 on the first. With the 5 down and the 56K you would have 61K to buy a partial on a note/notes that gave $1500/mo cash flow. Even at a 11.5% return to the investor you could buy 50 payments for $59,366. You would keep the difference if any after closing costs along with the second.
The more below market or the greater the spread between the buy and sell interest rates the more profits there can be.