Re: FIRST DEAL: a couple ideas - Posted by B.L.Renfrow
Posted by B.L.Renfrow on February 03, 2000 at 20:56:53:
In addition to what Steph said - with which I completely agree - realize that a qualifying assumption really offers no advantage over your going out and obtaining a new mortgage. As for “why” the lender requires you to qualify to assume, that’s the way it’s done in order for the lender to protect their interest. Non-qualifying assumptions are VERY few and far between these days, generally either a private mortgage or an old VA/FHA loan.
Any loan, however, is “assumable” via a land trust or PAC trust arrangement. You might want to consider that, as the terms of the existing loan certainly are favorable, if that’s a fixed-rate at 6.5%.
I agree this seller doesn’t sound terribly motivated, but he might become more so as the time for his move approaches.
Here are a couple other approaches you might consider, but before you do, you MUST get comps on the property so you KNOW what it’s worth. Never take the seller’s or the listing agent’s word for a property’s value.
If comps support a FMV of, say, $140k, you could offer, for example, $120k cash. Then you offer it with owner financing for $145k, and arrange a simultaneous close with a note sale to get the cash to pay your seller.
Alternatively, you could offer close to asking price if the seller will L/O it to you for his monthly PI payment. It sounds from your description as if you could likely get far more from a tenant/buyer. Probably not any back end profit in this scenario, but could be decent monthly cash flow, plus a hefty option consideration up front from your T/Ber.
Finally, if you’re not really sure how to go about these methods, just see if the seller will give you an option for maybe 10-15% under FMV, then you can market the heck out of it, or just assign your option for a small fee. That’s obviously not as profitable, but it’s a good way to get your feet wet in the business, and learn as you go.
Brian (NY)