Re: Finance problem - Posted by phil fernandez
Posted by phil fernandez on June 05, 2000 at 09:56:25:
Question #1. Do you think in your market you can get the $150,000 with owner financing? Are you still in a hot seller’s market or is it starting to become more in balance.
There are some attractive aspects to this deal. Nothing down and no bank qualifying. The most important issue here is how motivated is your seller. He is willing to split the $416, but I like the deal alot better if he does one of two things.
1./ He takes care of the entire $416 or
2./ You split the difference with him and he comes up with say $5,000 cash for you. Remember the house needs a new roof anyway and your buyers are going to expect a good roof. I don’t think you should come out of pocket for this roof. And the balance of the seller contribution of $5,000 can offset the split.
If you offer your buyer the financing you suggest at a payment of $1,375 and pay the seller 7.75% on $135,000 30yrs at $1,103 you net cashflow from the deal would be $272/month.
So after the smoke settles you would get about $10,000 down and $272/month as cashflow. Not too bad assuming your sure you can market the house at the $150,000.
Let your seller make up the total difference. If he wouldn’t he might not be as motivated, but it does sound like you have some seller motivation.
Also as Steve Cook mentions, a lease option could work here. The buyer comes up with some cash option money for your upfront profit, bump up the sales price to account for future appreciation for your back end profit and try to create a monthly cash flow. Can you rent the house out for enough to create the positive cashflow? Again in this lease option scenerio I’d make the seller cover the total difference. Otherwise you will not have a big enough monthly spread.
Good luck. Interesting deal. Negotiate hard with your seller and remember there are other deals out there. Go in with that attitude and you’ll win one way or another. Again good luck Art.