I don’t like what I am hearing here. This is an occupant who is being foreclosed upon be of violating the agreement with the former owner. And you will continue to deal with this person? Sounds bad to me.
You don’t sound like you are on top of this. You are being way too trusting, in my opinion. Bill Green warned us decades ago to avoid “red ribbon deals.” That is deals put together by other people that are all tidy and neat.
Money not into an escrow account? I don’t like that.
Never rely on an “appraised value” from anybody else. You either know the market values before you agree to a deal or you get your own comparable sales lists and look at the properties and see if you can tell what the property is worth.
I am in Oakland. If you communicate with me I will try to get you some comps, if you don’t do so this afternoon. I’d recommend that you call one of the major title companies and ask them to pull comps for you and e-mail or fax them to you. My e-mail address: tigerinpa@yahoo.com .
From what I have heard my advice to you is to get that check back. To not go forward until you know a whole lot more than you do now. If you cannot get the check back immediately, I’d suggest putting a stop payment on it.
Meanwhile, have you read my post for beginners? If not, you can find it by putting “beginners success” into the archive search function at the top of this main board of this CREONLINE.COM website. After reading that, ask yourself, “am I ready to start putting out money?” From what you have ssid, I doubt it, but you judge for yourself.
Posted by Maths on September 03, 2003 at 15:49:42:
Hi Everybody,
I am a newbie to this field. I had gone through a couple of courses and decided to do some investments. I decided to join with a gentle man who is in the business. He asked me to be his investment partner to buy a house which he found. The initial verbal agreement was that we’ll buy the house and sell it for a profit and then carry a second mortgage. We found a house in the east bay of california. The person who was living in the house was planning to buy the house from another investor and had defaulted some amount because of that the investor was foreclosing the house. My investment partner new both of them. So he agreed to sell this house to my investment partner for 313K.His initial estimate when I talked to him was that the house would be about 425K worth but it was appraised for 385K. Hence I invested about 25K (had to give a personal check to my partner instead of an escrow a/c) and he claimed he had put 15K towards the downpayment for a purchase price of 385K.Hence we are planning to take a loan of 350K (385 - 25+15). He told me that, if we take a loan like that, we can pay the balance 313 to the owner of the house and give my money back 25+7K and he will keep 5K. He plans to give this house on an equity sharing plan to the current tenant. What he told me is that, he will pay the mortgage,property taxes and insurance and give me an extra 200 per month and will close the deal after 2 years. He cannot take loan right now since his credit rating is bad. Hence I am taking the loan in my name for 350K.After 2 years we’ll close the deal at market price of that time sharing the profits 50/50 with the tenant based on the current fixed price of 350K instead of the appraised 385K. My partner is telling that for you starting at 350 is beneficial than staring at 385K. ??? I am not sure how all these things will come out. I am sure that people in this group do know what exactly is happening here. Is my investment partner trying to play game or is he fair enough. I am looking for ward for an honest opinions here. Why is he not going for lease option here
Hope all of you can contribute some opinions for me.
Posted by Randy on September 03, 2003 at 18:43:19:
For starters Verify the existence of the down payment your 25k+ his 15K. Who has it, where is it? If it has not been paid to an escrow account either get it back or put it in escrow.
The Equity Participation is fine, but base it on the current value of $385k. Tennant buyer can ?buy you out" in the next 12 months for $390k In months 12-24 =$395k after 24 mos. 50/50 split of the selling price of the property (in other words if/when he sells you get 50% of anything over $385k).
Realize that your providing a service your credit, your down payment ($25k) expect to be paid for the service your providing. All of this assuming Ron?s concern is addressed regarding the pending foreclosure.
Posted by Randy on September 03, 2003 at 17:57:43:
Equity Participation you start at the value as of today. Anything over Today?s value you split for the ?Convenience? of allowing this person to use your money to occupy and use a home they cannot qualify for today. IMHO you be selling it a premium of today?s value.
Check Your Math ? Close your Check Book? - Posted by Randy
Posted by Randy on September 03, 2003 at 16:27:29:
And find another ?Partner?. First off ?we are planning to take a loan of 350K (385 - 25+15)? 25k+15k+350k=$390k not $385 you lost 5k there.
Secondly your putting in 25k, your getting the new mortgage he?s going to ?Give You? $200 a month? What has he put in? He?s going to keep $5k WHY? Two years from now your going to sell it for less than the appraised value today?
I hope you understand this deal allot better than it looks in your description here.
Re: Check Your Math ? Close your Check Book? - Posted by Maths
Posted by Maths on September 03, 2003 at 16:37:58:
Hi Randy,
Quick Update: The extra 5K is for the closing costs. I am investing 25K. Taking 350K for 5% int amounts to 1878 + 300 (for insurance and taxes). The tenant agrees to give 2300 per month. ie., around 200 per month. After 2 years, anything above 350K will be shared between the tenant and me if he buys the house (??). The current appraised price is 385K.