Would you do this deal?? - Posted by osupsycho (OK)
Posted by osupsycho (OK) on June 07, 2005 at 20:25:17:
Thanks for the info Kim I got the name of her case worker and will call her in the morning.
Here is the rest of the story to see if everyone thinks it is worth doing this deal.
She is on a fixed income (SSI disability) and has no husband or children (just two little dogs). She claims to not smoke, drink, or do drugs. Wants to move because of the drugs in her current park and wants to own her own home. She claims to be able to pay $450 a month with section 8 being most of it($387 section 8 + $63 her own part = $450). I will verify this tommorow (I know the property will also be a factor in how much section 8 will do). This amount though has to include insurance, lot rent, taxes, and all utilities except electric. Lot rent is $150, not sure on others but not expecting them to be over $100 month (I will found out tommorow though). So this means I will get about $200 month toward note payment. It is a lease to own though so I have to collect all the money and make the all the payments (just like a landlord). The other problem is that she only has $2-300 for down payment.
On the good side the home (which I haven’t bought yet only tied up) is going to be bought for $3500, $1500 cash and 10 monthly payments of $200 each. So that means for the first 10 months I won’t make anything, unless I can get her to do a promissory note for a few months to go toward a bigger down payment (ie, $50 month for 10 months to get to the $750 I was wanting originally). I did plan on doing the deal $7500, $750 down, $300 month (without lot rent, ins, taxes, utilities), 7% for 24 months. Since she can’t give me the down (unless promissory note works) and the monthly payment is going to be only about $200, I will have to extend the length of the note. She is fine with this. So using the following #'s:
I = 7%
PMT = $200
PV = $7275 ($7525 - $250 down)
N = 41
The good news is that I will basically be guaranteed the payment (at least section 8 part) and she seems to be a real good type of buyer/tenant. The bad news is she would basically be a tenant till it is paid off. I will also have to pass a section 8 inspection at first and once a year. I have checked with section 8 and once the note is paid they will continue to assist her with the other expenses so I can get out of the picture. Any thoughts would be welcome.