Posted by Darrin (GA) on March 02, 1999 at 23:08:52:
If they paid you by check find a mortgage company with a “Mortgage only” program. 12 months cancelled checks for on time payments will qualify them for 90% loans regardless how crappy the rest of their credit is. After a year or more renting you might be able to classify these as lease purchases and refinance instead of purchasing. What’s the difference? This way your people will not need 5% down.
Good Luck.
Darrin
Discount Mortgages - Posted by Mark (stl)
Posted by Mark (stl) on March 02, 1999 at 21:08:51:
I have 2 tenants interested in purchasing the homes they live in. My problem is they are typical tenants, no money for a down payment and not the best credit history. I was considering seller financing (me) and doing a simialtanious (wow I sure messed up that spelling)close of the note. Can anyone with some experience with notes give me an idea how to structure this or any other Ideas how to pull this off.
Both houses are worth around 30k and all the tenants will have down is between $750 and $1000.
Re: Discount Mortgages - Posted by Bill Gatten
Posted by Bill Gatten on March 03, 1999 at 14:41:06:
THE FOLLOWING IS NOT AN ADVERTISEMENT!!! Just good sense! You MAY try this at home! You don’t need to see dealer for details! Phew!!
Mark, consider placing the properties into two different land trusts in your own name and making the tenants co-beneficiaries in them with you. Then increase their rents to the level their payments and expenses would be if you carried paper (the lease needs to be a triple net lease): this gives them 100% of the same benefits any homeowner could have.
Set the trust and the respective leases to terminate in 2,3,4 or 5 (or more) years, at which time the “resident beneficiaries” are obligated to either–1) sell and pay you off or 2) re-finance in their own names and pay you off. In the meantime, you have positive cash-flow, whatever you can collect from them up front (if any) for their “equity contribution,” and 100% of the freedom from repairs, mtce, management, insurance, etc.: all paid by them in exchange for the interest and property tax write-off (equity build-up and appreciation).
Mark, in this scenario, you can contractually give them all or only part (e.g., 50%) of the Future Appreciation and Equity Build-up… it’s up to you). And you have not violated a Due-on-Sale clause or jeopardized the property’s title (liens, suits, judgement, BKS, martial deputes, etc… cannot attached to a co-beneficiary held land trust property). Further… it they don’t pay: you can kick them out as tenants, in lieu of having to resort to foreclosure, ejectment and Quite Title due to their claims of “equity.”
Hope this helps.
Bill
Re: Discount Mortgages - Posted by Ben
Posted by Ben on March 03, 1999 at 07:46:11:
You are in need of what John Behle calls a “leveragectomy” where you sell the first mortgage but take back a second thereby lowering the LTV on the first. Also, I have heard of sellers giving credit for
a month or two of rent payments and applying the amount towards the down payment in order to lower the LTV also. Post this on the cash flow forum forum for John Behle. Ben