Posted by Stacy (AZ) on February 21, 1999 at 17:15:24:
I would suggest posting this on the cash-flow newsgroup. But one thing I would consider doing is to split the note into two (John Behle calls this a leveragectomy) The first should be at 80% LTV ($43K) and you could probably sell it for 91% to 95%, depending on the note buyer’s criteria and payee’s credit rating. This would be close to your $41K. Then you would keep the second note for some nice monthly income.
I’m still learning about notes through John Behle’s courses, but just wanted to throw out an idea for consideration.
Posted by L. Casey on February 21, 1999 at 17:04:09:
Here are the facts of my transaction. I am escrow to purchase a two-bedroom fixer house for $16,000. The repair costs should be no more than $13,000. I have a hard money lender that is going to lend $25,000. All I have to put into the deal is $6000 of my own money to cover closing costs, points and a fee to the person who found the deal.
My total costs into the deal will be approx. $31,000. The house will appraise at approx. $54,000 when all the repairs are completed.
When I sell the house, Here is how I would structure the deal. Sales price $54,000. Owner financing amortized for 30 years.
Posted by Ed Garcia on February 22, 1999 at 09:55:54:
L. Casey:
First of all I like the answer that Bud Branstetter gave you.
He was making the note more attractive so it would be more marketable.
Secondly, it?s interesting how each of us see things so differently.
Casey, you would be surprised how many people out there have good
credit and no money for a down payment.
I personally would advertise the house as a no money down, 100%
financing on approved credit. Today there are 100% programs all over
the place for people with good credit owner occupied.
In the event I had a potential buyer who?s credit was not A, but B or C.
Then I could have my mortgage broker do it at 75% LTV through a
company like, First Franklin, BNC Mortgage, North American,and
even Countrywide has B and C programs now to name a few.
These companies have programs that will allow me to carry back 25%
still making it 100% financing to the buyer.
That gives me $40,500 and I would have to work out the cost between
me and the buyer.
First Franklin, has a program where they?ll finance a deal 100% and
allow the seller to pay up to 6% cost, on a borrower with good credit.
Casey, I thought I?d give you just another point of view.
Do you really need to get your money back plus 10k?
What is the hard money costing you? If you can let the note season up a hair you could get more for it. Getting the 31k back shouldn’t be to much of a problem because your at less than 60% LTV. Or for the 41k (76% LTV), you could sell the house with Owner Financing and then get a good mortgage broker to do a refi, or look for private money, but at least you would have the house sold and someone paying the underlying note so you don’t have to.
My first comment is not to put the cart before the horse. Find someone that wants to buy, then figure out how to get them money. A good mortgage broker can be your best friend. He can probably get many of those C&D buyers a loan. If not-I structure the first at 82% so that it can be sold for the 80%. This can mean raising the interest rate on the first to 11%. Broker it yourself by getting the appraisal and getting the 1003 filled out. You may not get 10% down. You can rent to own until they make extra payments for the 10%. Or sell and collect the extra on the 2nd over time.