Financing a condo - Posted by shellack

Posted by Brent_IL on September 15, 2003 at 20:44:13:

Well, I can?t speak for anyone else but the reason I ignored this post earlier was because I felt it was a lost cause.

N.B. This isn?t a character assassination. It?s a comment about where you?re at.

Now just listen to the way this sounds:

I?m new.

I have no money

Because I?m new, by definition, I have no idea what I?m doing.

Knowing that I?m new and don?t know what I?m doing, I put out bandit signs anyway.

I talk to an owner who wants to sell, but decline to ask questions that would help me formulate an offer that he will accept.

?What is the best approach for this situation??


I don?t know what TAV means. Is it the taxable value? If it is, the value is irrelevant for your purposes

I?d double check the FMV. What I wonder about is why a property that is available at 70% of FMV is on the market long enough to have photos on an appraisal site. Is the FMV a seller?s guesstimate? Why wouldn?t the guy list it with a REALTOR®, pay 10% in transaction costs, and net an extra $10,000? Get real comps.

He can?t find a buyer for $50,000. What are you going to do to locate someone who?ll pay more? Will marketing cost money of which you have none?

The time you have to work with depends upon the terms of your option contract. If it says that you have to notify the seller of your intent to sell within the option period, it will specify an additional time for settlement. Most option agreements say you have to close within the option period, but there are a lot of sloppy contracts out there.

You?re going through all of this what-if and what should I do stuff without talking to the only one who can help you; that?s the seller. He may be motivated because the place is vacant, but if it is free-and-clear, he has some breathing time between tax payments.

Remind the seller that his homeowners insurance will consider the condo abandoned if it is vacant longer than 30 days and will reject any claims. It?s a minor point, but worth mentioning.

A mortgage has no bearing on whether a property can be L/Oed, but, as you said, it is more of a challenge to get the seller of a property with no liens to agree.
I would treat your meeting with the seller as an information gathering session. You can tell him you that you have two other properties to look at before you can make an offer and you’ll get back with him in 48 hours. Read Joe Kaiser?s article, ?Get on the Same Page with the Seller,? at There are other articles that will help also. Read them before your meeting.

It is premature to look at structuring an offer or maximizing your profit. Anyone can make offers, but you will need accurate information to get the majority of them accepted. Get as much info as you can and re-post.

I do wish you luck.

Financing a condo - Posted by shellack

Posted by shellack on September 15, 2003 at 01:11:36:

I’m new. I’m meeting my 1st prospect tomorrow. This prospect replied to a bandit sign I’ve posted.

Here’s the outlay:
Motivation: Bought new house. Condo is vacated.
TAV: $66,010
FMV: Claims $69,000
He immediately said he’d take $50,000 over the phone. I did not haggle as I have yet to see the property. I saw the photo on the appraisal site and looks to be in excellent condition.
3/2.5/2, brick, 1550 sq.ft livable
The property is paid for.

What is the best approach for this situation? I have no money.

I could get it under contact and flip it. If I did this, it’s my understanding that investors like to see a 70% LTV, which means I need to offer it to the investor for around $48,000. So, am I correct in that any price I could get it under contract for under $48,000 is cash in my pocket when I double close?

I would obviously like to keep as much of the profit as possible. The only way I can see doing this is to get it under contract or option it for as long as possible (what is a reasonable time 60, 90 days?) and try to find a buyer in that period. I obviously cannot owner finance (would like to for the cash flow, but, oh well) so, it seems to me that the only option for this is for the buyer to provide their own financing. If this is the case, how long do I need from the time I locate a buyer until closing? Does this matter on an option. For example, if I option it for 45 days and find a buyer on the 40th day, I cannot close in 5 days. Does the fact that the deal can’t be closed before the option expires nullify the option. In other words, do you have to close within the term of the option?

Since there is no mortgage, is there any way to lease/option it to a buyer. The challenge I see with this is that the owner owns the house outright, which means they’ll expect a cash outlay for our agreed price upon closing. Is there a way to structure this that I am not aware of?

I suppose the obvious question ulimately is, “How do I maximize my profit from this deal?”

Thanks for all of your help guys and wish me luck,


Re: Financing a condo - Posted by shellack

Posted by shellack on September 15, 2003 at 17:18:40:

  • anyone give me a hand here please?