Posted by Jon Richards on February 01, 2001 at 19:42:59:
This sounds like an incredible deal at 7 GRM in a great neighborhood with upside potential. If your figures are correct, you should do it anyway you can.
One way is to create a seller carryback loan for as much of the purchase price as possible. Perhaps you can afford $20,000 cash down on the $425K sale price. This leaves a loan of $405K at 8%interest only. This keeps your payments low at $2,700 per month all due in 36 months. You could make the balloon in 60 months or more. Just depends on how long the seller is willing to wait.
Here’s what happens: you sell part of the note to Metropoltian Mortgage or another note buyer at an 11% yield. They will buy all the payments and part of the balloon. They will put $240K into escrow. The seller will get your 20K down payment for a total of $260,000 at the close of escrow and then $186,211 when you pay the balloon. This totals $446,211 (one a $425,000 property) to the seller and you get in with only $20K down. Everyone wins.
If the seller demands all cash, you will have to sharpen your negotiation skills. We do this all the time. Visit www.create-a-mortgage.com to learn more about this purchase method.
Best of luck.
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