Got the deed on another house..need suggestions - Posted by Tarun_md

Posted by Stacy (AZ) on March 09, 2001 at 17:06:36:

Geez, Johnboy, quit being such a perfectionist! It’s only money!



Got the deed on another house…need suggestions - Posted by Tarun_md

Posted by Tarun_md on March 08, 2001 at 21:23:13:

Hey guys,
Today, I got the deed on another house. I’d appreciate some comments.
FMV is 105k
Loan balance is 96k at 7% fixed…piti is 1029/mo
Carpet needs to be shampooed. Town House is in decent shape.
Sellers cannot afford to make payments. They haven’t made payment for this month(March)…but told me that they can come up with half the payment.
They have agreed to move out by day after tommorrow.
Upon speaking to a realtor, I found out that rental comps are around 950/mo.
I plan on either l/oing it or owner financing it. If I find someone by the end of next month, I am looking at paying about $1500 out of my pocket for the mtg. Hopefully, I’ll recoup it from my buyers.
One suggestion that I made to them was that they should call the lender and tell the lender that they cannot make this month’s and next months payment but will be able to start making payments on May 1st. I suggested that they ask the lender to give them some kind of a payment plan where they would be paying a couple of hundred bucks a month over the regular payment starting in may to catch up for the 2 missed months. The reason I did this was so that I don’t have to pay anything out of my pocket and would also be able to buy time to market the house.
Do you guys see a flaw in this approach?
Also, how do the number look? Is this a deal you would attempt to do?


Re: Got the deed on another house… - Posted by SueC

Posted by SueC on March 09, 2001 at 09:48:31:

You are going to have negative cash flow every month? this sounds far too thin. Esp. if the market slows, you may not get $105K, you may wind up holding this for a long time, but rents won’t cover your payments.

Re: Got the deed on another house… - Posted by JohnBoy

Posted by JohnBoy on March 09, 2001 at 11:57:01:

How do you figure a negative cash flow??? Come on attorney woman…THINK!!! LOL

He said PITI is $1029 per month. The loan is $96k at 7%. That puts the PI at $638.69.

He said FMV is $105k.


I sell with owner financing for $110k. I get $5k down and carry the balance amortized over 30 years at 11%.

That’s $105k at 11% amortized over 30 years, which comes to $999.94 PI, plus taxes and insurance.

$999.94 PI - $638.69 PI = $361.25 per month in POSITIVE cash flow!!! Plus the $5k down, minus the $1500 he paid out getting the mortgage current, leaves $3500 cash up front in his pocket!

Still see a negative cash flow in this deal??? :slight_smile:

DOH! - Posted by SueC

Posted by SueC on March 09, 2001 at 14:31:22:

Did I say that? It’s Friday, I can’t think. I was being lazy, thanks for waking me up JB.

Howevvah - the taxes would eat half of that extra $360+ in my neck of the woods, they’re so high here I’m just used to figuring that in automatically, because it’s deadly if you don’t. But that would still mean $180/mo plus the $3,500, not bad.

Re: DOH! - Posted by JohnBoy

Posted by JohnBoy on March 09, 2001 at 15:56:49:

Must still be that Friday thing hitting you!

Your missing this. The principle and interest payment would be $999 PLUS the taxes and insurance. Remember, he said the PITI was $1029. That means the principal and interest on that amount is only $638 which means the taxes and insurance is $390 of that $1029.

So when he finances the $105k at 11%, the principle and interest payment will be $999 PLUS another $390 for that taxes and insurance making the PITI $1389.00 per month. After paying off the underlying PITI of $1029, that leaves $360 for positive cash flow! You don’t deduct the taxes and insurance out of the financed amount…you ADD that in addition to the principle and interest payment just like any other mortgage.