Creative Closing Technique Needed - Posted by Denice


#1

Posted by PBoone on October 28, 1998 at 12:14:50:

Have you tried to borrow the $3100.00 from relatives or lenders that offer high interest rates ? If the property lends itself to the debt service those are ideas.
We sometimes offer partnerships for cash. It all depends on the cash flow
Pat


#2

Creative Closing Technique Needed - Posted by Denice

Posted by Denice on October 28, 1998 at 11:57:46:

I are purchasing an investment property for $62,000. The owner has agreed to hold a note for 20%. However, the primary lender has asked me to put 5% down with the current owner holding a note for 15%. The owner has agreed to give back the 5% after closing so I may make any needed repairs, etc. but is not sure how we can structure this agreement legally or how we can set it up so that the 5% in question will indeed be secured once the closing takes place. He will hold a note for the 15% and does not feel comfortable with just a verbal for the remaining 5%.
Thank you.


#3

Re: Creative Closing Technique Needed - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on October 30, 1998 at 10:14:17:

Increase the contract purchase price by 5% (assuming the property will appraise) and write in a special condition clause, that seller agrees to give you a credit of (write a $$ figure there) at closing towards the repairs of the property.

In general, most lenders allow seller’s contributions of up to 6% of the price. Make sure your lender has seen this contract.

At the closing time you’ll just zero-out your downpayment with this credit.


#4

Re: Creative Closing Technique Needed - Posted by Eduardo (OR)

Posted by Eduardo (OR) on October 28, 1998 at 16:47:09:

Denice–

I think you are unnecessarily complicating this by hiding the fact from the first position lender that the seller will give you a rebate of 5% after closing. Why not do what a lot of people do: Write into the contract language that the seller agrees to reduce the purchase price by $X (5%) in consideration for your agreement to repair and improve the property within a year by spending the same amount. You could even list an agreed upon set of repairs and furnish estimates and agree within a year to furnish seller with paid receipts indicating those repairs were done. Then his security for his 15% note is even stronger. This and variations done all the time. --Eduardo


#5

Re: Creative Closing Technique Needed - Posted by Bud Branstetter

Posted by Bud Branstetter on October 28, 1998 at 12:33:05:

You could show it as deposits held by seller. The closing statement would zero out the $3100 down and the $3100 in deposits. At this time of year here you get large credits because of 10/12 of the taxes that are not due until January.