Posted by Suzanne on February 21, 2002 at 15:58:53:
I’m not sure where Randy got the $4,000 from. You are not taking out a new loan for this house. You already stated that the current owner is paying $700 on this house, and needs some debt relief so he is not paying a double mortgage.
What I see you doing is creating a L/O agreement where you pay the current mortgage of $700, and have the tenant/buyer pay 2K in monthly payments giving you a monthly cashflow of $1,300. If you has to contract the house for the FMV, you will receive no front end or back end, but the cashflow in the middle is well worth it.
Also, you could have another profit center if the first tenant/buyer you put in the house decides not to buy the house. Then you keep the non-refundable option money that you collected up front which is usually at least 3%-5% of the selling price. The best part is that you get to collect that option money again from the next tenant/buyer you put in the house.
I see this as a very good deal for you. I agree with Rob above that if you could talk the owner down on the price a little, it would even be better. I don’t see it as necessary with the nice cashflow you would be receiving.