But I buy houses from motivated sellers. I negotiate the best deal I can that solves their problem and one where they win and I win. My winning involves making profit, and there’s is nothing wrong with that.
I am however not in the business of educating people what is a good return for them, that is their job and based on their needs, and education, motivation, needs, etc.
I’m not in the business of screwing people as you say but likewise helping people solve problems in which I get paid, and quite profitably I might add.
I plan to offer $20,000 for this property to an out of state homeower who seems to be pretty motivated properties sell for 42-45K in this area. Property needs some TLC nothing too major. Called him and he asked me to fax him an offer. I plan to send him a letter of intent with several choices. But the financial calculations are starting to confuse me.
My questions is: If the seller agrees to carry a second mortgage, for $10,000 say @ 6% for 5 years interest only, (provided I can secure a hardmoney loan for $10,000, he indicated he needs cash, back taxes 2,338.00). Is this how my offer would translate.
($10,000* .06)/12 = $50.00 per month.
Or did I skip something because when I work it in the reverse it seems the seller would only receive $6,000 in 5 years. ($50.00 * 120 months).
Any help/insight/clarity would be greatly appreciated!
This is just one of 4 offers I have in mind for him to choose from, so if I could just get this straightened out in my head I’m confident I’d be on my way.
Thanks loads.
to negotiate the best deal you can. Low or not if the seller will go for 6% then do it. I dont offer any when first negotiating. The other thing is when negotiating, you do so on thier percption not your own. Dont decide what is a good deal for them.
it is a baloon! you still owe the 10g’s after 5 years. Also, your interest appears to be a little low. you can get a cd atthe bank for 7.5 now!!! long term cd maybe more. better check!!
Posted by Mark (SDCA) on April 07, 2000 at 13:00:28:
At the end of the 5 years, you still owe the seller the 10,000. You have a balloon payment of 10K due in 5 years (since you are paying “interest only”, you have not paid down any of the loan balance.)