Posted by Ronald * Starr(in No CA) on August 25, 2003 at 09:47:40:
Frank Notaro–(NY)-------------
In a situation like this, it is good to provide more information about the seller, the seller’s goal, the seller’s situation, and the financing existing on the property. When that sort of information is included one can often figure out what to offer.
In general. the owner-carryback seems to make the most sense here. But how to structure it depends on the information we do not have.
You say: “I don’t have any equity to speak of … .” However, having the seller carry a loan and securing that loan on both the sellers property and your existing property makes some sense. For one thing, perhaps your property has appreciated some in the 7 months since you wrote your contract. Also, you perhaps put down some downpayment?
The asking price on this property is only 2% more than you agreed to pay 7 months ago. This works out to an annual rate of appreciation of about 3.5-4%. What is the rate of appreciation? If it is that or above, this is as much a deal as your current purchase. Assumeing comparable properties, of course.
Don’t be surprised if you cannot structure a low down or no down deal with the property. I estimate that only about 2-4% of property sales are suitable for an owner-carry-back no down deal.
I hope that there is positive cash flow involved here. You do not mention the rents you are getting or expect for this new property. Trying to buy too much property too soon is one of the major mistakes that beginners make. Be sure that you can handle the situation of repair expenses and perhaps some vacancy.
Good InvestingRon Starr******