Posted by Laure on May 18, 2000 at 05:05:39:
must be tired, didn’t see your 10k rehab allowance… I need to post when I am ALERT !! hehehe
Laure 
Creative finance terms for input by others - Posted by Justin
Posted by Justin on May 17, 2000 at 12:11:58:
Hello all,
I’m in the middle of a deal and would like to have a little input from others if this deal I am structuring is safe and sane. hehe
Ok Seller’s dream price was 104k. Needs rehab, is assesed at over 109k. Rehab work is cosmetic. carpet, paint little landscape and thats about it. It looks bad, but isn’t anything some carpet and paint can’t take care of.
My offer,
95k
I have bank finance 50k @ 7.5% and have the seller carry a second for 55k @ 9.0%. Total Payment 792. I keep the difference 10k for rehab and a little extra I put in my pocket. I plan to do the rehab and sell for 115k (this is what comparable properties are selling for in the area). Is this enought profit margin to do go on?
This would be the first time I have a bank involved. Does or will the bank ever know about the extra 10k I receive?
Thanks in advance.
Re: Creative finance terms for input by others - Posted by Ben (FL)
Posted by Ben (FL) on May 17, 2000 at 16:44:01:
Where will the extra $10k come from? If the seller has a $40k mortgage, and you’re expecting to get the $10k from the difference between first mortgage payoff and your financed amount, good luck. I haven’t found a bank or mortgage broker that will or even can do that without lying about the actual purchase price. For some reason banks don’t like it when there’s extra cash flying around when they underwrite a mortgage.
If there is no mortgage to satisfy, and you will be getting the $10k back from the seller, make sure you have an iron-clad, separate agreement with them to pay you this. You wouldn’t want them to get the big fat check for $50k from your bank, then turn-around and change their minds. Don’t tell the bank about this separate agreement.
Of course, it’s entirely possible that I haven’ found the right bank, mortgage broker, magic phrase, or deal yet for cash at closing, too.
Re: Creative finance terms for input by others - Posted by Debby in Houston
Posted by Debby in Houston on May 17, 2000 at 16:17:17:
Not enough profit to go through a bank! Your profit will evaporate fast after closing costs on both ends and holding costs. If this is truly a motivated seller have him get his own refinancing, say 85% LTV of 115K is $97,750. He gets his cash. You get the deed subject to the underlying loan, making his payments (make sure his pymts won’t be higher than you can get from future buyer). Then sell owner financing for 119,900. Get 8-12K down, balance at say 10%, 30 yr amort, 3 year balloon.
Re: Creative finance terms for input by others - Posted by Laure
Posted by Laure on May 18, 2000 at 05:03:52:
I agree… too skinny. You will be shocked at how quick those “little cosmetic things” add up, and drain your check book. Sounds like 5 or 6k in rehab to me. Get him down in price or walk.
Good luck,
Laure