Help me sell quickly!! - Posted by Scott

Real Estate Investing
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Posted by Stacy (AZ) on April 22, 2000 at 23:38:16:

I agree that a lease/option allows more control. But, getting 10% down (or more) on a lease/option is very rare. My goal (and possibly Scott’s) is to get my cash back-out, as much as possible, and get a cash flow going. I like the idea of going to the mailbox, without the worry of being a landlord (L/O).

If Scott put 10% down on his low purchase price, and sells 10% above market, with 10% down, he should get most of his money back, if not all of it. Then he’s got his cash back for more deals, and is getting “gravy” cash flow, maybe for free.

However, this strategy is much more scary in states that treat land contracts as mortgages, and force a long foreclosure process. In AZ, foreclosure of a land contract is very close (in time) to evicting a tenant. So, maybe you can see why L/O is not necessarily foremost in my mind.

I put together a fairly complex spreadsheet to analyze this type of deal, and was pretty much awe-stricken when I saw the cash-on-cash returns. Until then, I assumed the returns would be mediocre.

The advantage over selling a note at close, is that you don’t have to accept a large discount when the loan gets refinanced, or otherwise paid-off in the future. This is, of course, if you are willing to wait for the refi. Having no, or low, cash left in the deal makes it much easier to wait. Anyway, good ideas on this thread. Any one of these methods is good, but it depends on your personal goals as to which is best.

Stacy

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Help me sell quickly!! - Posted by Scott

Posted by Scott on April 22, 2000 at 11:41:56:

Hey everyone.

I’ve got a house under contract now for $57,000. After looking at comps, the house can sell for around $75,000 after a minor rehab of about $3000.

I’d like to know the best way to market the house to sell it quickly. Right now I have it in the paper as a lease option for $73,900, but have not received any calls yet (it’s only been 2 days). I’d like to sell it without having to go through an agent to avoid the commission. Is this wise? Should I use a realtor?

I had to use traditional finanacing, 10% down, because the owner wouldn’t do lease/option because he wants the money now. So now I’ve used $8000 out of pocket to get this property and would like to sell it as quickly as possible. Any ideas from the pros???

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Re: Help me sell quickly : Good advice from Michael, Stacy and Phil !!! - Posted by Ike

Posted by Ike on April 22, 2000 at 20:06:40:

Hey Scott,
Looks like you got a fantastic deal.Phil,Michael and Stacy pretty much said it all but if I may, I would like to add my own two cents into the mix.Michaels point of creating owner financing and then cashing out at the closing is the most logical way to go, so long as you work hand in hand with the investor(s), who will advice you on how to tailor your note to their specifications and will eventually buy the note at closing.This option makes sence if your goal in this transaction is cash out and move on to the next deal.If you decide it is cash flow you want, then you might either try a wrap or lease option as Stacy suggested ( just make sure you get your $8000 back up front!!! ).However using this method succesfully may depend on what type of funds you are using to buy and fix up the property.If the funds are from your bank or from any other source providing a good interest rate, then the wrap around/lease option technique is sound. If on the other hand you are using “hardmoney” (with interest rates as high as 15-18 %) to finance your deal, you might have to charge a higher interest rate on the wrap,their by making the terms “less palatable” to a potential home buyer, because of high monthly payments.(Hard money is only good for short term deals usually 3-6 months )
And Phils’ ad ,once placed, will provide a lot of potential buyers.
For more information on structuring your deal by offering owner financing,check out the following websites - - - ,
www.bill- bowen.com (easymortgage )
www.kashout.com
www.americannote.com - - -
The above mentioned companies are note buying companies that help you structure your note before they buy, you can also do some of your own research on the internet to find other similar companies check out these companies and choose the one that best appeals to you, or better yet, you can post another message in this forum (CREONLINE )asking for un-seasoned note buyers.
Again like Michael said, this is by far the fastest and the most efficient way to sell your property.
Finally do some checking on these sites and please let me know what you find out and also let me know how you made out on your deal!!!
To your success,
Ike.

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SELL Quickly with terms and still get your cash out - Posted by Michael Morrongiello

Posted by Michael Morrongiello on April 22, 2000 at 14:35:47:

The suggestions offerred are very good if you are prepared to create a monthlhy cash flow. However they still leave a lot of your cash and equity in the deal for a period of time and they also still require YOU to be liable on the debt you owe in the event something happens where the buyers you sell to stop paying you.

There is NO question in my mind the FASTEST way to sell a property is to offer it to the marketplace with Owner financed terms. However IF you wish to get your cash & Equity out now and and have it available to do other deals, then consider selling with Owner financing and properly structuring your financing so that it can be converted into immediate cash liquidity.

A properly set up & structured deal can allow to still sell on TERMS by offering to finance the sale and then still get up to 95% of your financing back to you in CASH.

Michael Morrongiello

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Re: Help me sell quickly!! - Posted by phil fernandez

Posted by phil fernandez on April 22, 2000 at 12:13:51:

I would run an ad in the paper :

Owner Will Finance
No Bank
Quick Closing

Your phone should ring. It will then be up to you to screen the prospects and find someone with a 10% downpayment with decent credit and a stable job.

If the house’s FMV is about $75,000, you should be able to attract someone at $80,000 because you are offering them terms.

Wrap the financing that you are offering around your existing loan.

You might even be able to get the prospect financing,when they think they can’t, through a mortgage broker

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Re: SELL Quickly with terms and still get your cash out - Posted by JohnH

Posted by JohnH on April 24, 2000 at 15:26:07:

Michael,

I remeber reading an old post where you offered a free report detailing owner financed sales. Is this report available? If so, how can I get a hold of it?

Thanks,

John

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Re: SELL Quickly with terms and still get your cash out - Posted by Scott

Posted by Scott on April 22, 2000 at 14:52:46:

Michael
Can you give me an example of how to do this typr of transaction. How can I do owner financing and still get 95% cash on my financing???

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Re: Help me sell quickly!! - Posted by Stacy (AZ)

Posted by Stacy (AZ) on April 22, 2000 at 13:31:34:

Good advice by Phil. I’d do what he said with the wrap, but I’d also bump the interest rate to make a larger spread each month. If you got 9% financing on your loan, bump the wrap financing up to 12% or so. I’d also sell using a contract for deed, because in my state, these are fairly quick and easy to foreclose, as opposed to an All Inclusive Trust Deed. Also, I’d start the selling price at $82,500 (10% over FMV) and see if I had any luck.

I think if you would run the numbers, you’d find that you will have a very nice monthly cash flow (well over $200) and have no cash (or very little) left in the deal after you get your 10% down. Actually, I’d even try for more than 10% down on a house in this price range.

You could put a 2-year balloon in there if you want to get cashed-out soon. But for me, I’d want the cash flow for as long as possible, especially after getting all my cash back out of the deal on the sell.

Just my opinion (as you can probably tell, I’m very much into Bronchick’s Cash Cow strategy right now).

Stacy

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Re: SELL Quickly with terms and still get your cash out - Posted by MDonovan

Posted by MDonovan on April 22, 2000 at 18:59:25:

Find a good mortgage broker who can pre-sell your second. He will help you negotiate terms to make the note very marketable. There are a lot of pitfalls with writing your own note (attorneys, in general, don’t know how to market notes).

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Re: Help me sell quickly!! - Posted by Scott

Posted by Scott on April 22, 2000 at 14:56:28:

Stacy

Explain to me a contract for deed. Is that just a contract deeding them the property?
Does the property immediately go into their name with a contract like this??

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Re: Contract for Deed - Posted by Stacy (AZ)

Posted by Stacy (AZ) on April 23, 2000 at 24:53:58:

Scott-

The best way for you to structure a contract for deed sale, if you’ve never done one, is to get with a good Real Estate lawyer in your area. The few hundred dollars it would take to get a legal, state-specific contract for deed written is well worth it.

A contract for deed goes by different names in different states. Some examples are Bond for Deed, Installment Land Contract, Land Contract, and Agreement for Sale, which is what they’re called in Arizona.

Basically, “equitable title” passes to the buyer at closing, but “legal title” stays with you, the seller. The deed stays in your (seller’s) name until the contract is fullfilled, meaning you are paid-off. Then, the deed is given to the buyer. In essence, the buyer is making installment payments to get the deed.

In some states, there is a large difference in the foreclosure process for a “Land Contract” sale, versus a Trust Deed or Mortgage foreclosure. Here in AZ, if the buyer’s equity position is 20% or less, it only takes 30 days to foreclose (plus or minus). So, if a buyer gave a 15% downpayment, and has made payments for a year or two, and then stopped paying, his equity position will be less than the 20%, and the foreclosure is pretty quick, as compared to foreclosing a mortgage or DOT.

However, your state may not be as “understanding” with it’s foreclosure process, so it’s best to research the statutes. Also, I’ve read that some juristictions will reclassify a land contract as a mortgage, and force a longer foreclosure process. So, it really is something to learn about before using.

By the way, when selling, it’s best not to record the Land Contract if your state’s laws allow it. When buying on land contract, make sure you record it.

This is a very brief view of land contracts, so I’d recommend you learn about your state’s laws before using one.

Stacy

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Buy here pay here - Posted by MDonovan

Posted by MDonovan on April 22, 2000 at 19:08:42:

You hold the deed until they pay you off completely.

There is no cash out here unless you re-finance. If you do that, I would recommend a lease/option before a contract for deed (land contract). It gives you more control.

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Re: Help me sell quickly!! - Posted by Lee

Posted by Lee on April 22, 2000 at 17:06:19:

Go to “http://www.metacrawler.com” and within the quotes, type in Bond For Deed.
The reults will tell you all you want to know.

Good Luck

Lee