Condo Caveat - Posted by Carmen
Posted by Carmen on April 16, 1999 at 12:10:10:
First, to answer your question, how about getting the seller to create a note (to you), which he can sell at closing for a discount? Too much info to go into, but many good articles and cash flow forum can help.
Or, how about a “retail flip” - tie it up for 30-60 days, then work like heck to get a retail buyer - pull out all your tricks, and make your offer to everyone in that condo - I’m sure there are a few renters who would love to own “if they could only afford it” … - offer owner financing if you figure out the Note thing; or offer to take a second for the down payment (20% of, in the low case, $33,000 is $6,600, still giving you $33,000 - $23,000 - $6,600 = $3,400 cash now (minus closing, and try to get the buyer and seller to pay as much as legally possible)-assuming no down payment from the buyer. If you make your note short or have a balloon, the balance can be paid in a few years - plus monthly income on the note)
In this area, rents on 2B condos are (on the low end) $600, so this would be a great deal for a “future homeowner” - about $260/month on their mortgage, + condo fees (say $60), + taxes/insurance (say about $100) = $420, which still gives them about $180 a month without digging any further into their pocket to pay you on your note. If my T-Value calculation is correct, that means that with an interest of 12%, your note would be paid off in 46 months (for a total of $8,262.77) under a “normal” amortization - principal and interest.
Just a little PS on Condos - make sure you have an exit strategy. If you are going to keep for rentals, don’t forget to add the condo fees to your monthly costs! and make sure that the condo is “rentable” - many condo docs restrict rentals (had an L/O fall through that way - the condo association refused to accept the tenant/buyer).