Posted by Ed Garcia on March 08, 2001 at 23:23:28:
Bill,
You’re a lucky man; being able to do this deal, is not a matter of being creative for you. You’re very resourceful. It’s a matter of good business, and deal structuring for cost effectiveness. I think we should talk one on one because there is no lesson here for the others. It’s just a matter of preference and financing with funds availability for future deals.
If you like, you can call me tomorrow at (909) 944-0199 and we can discuss your deal. I will also be available over the weekend at that number working in my office.
Mr. Garcia, I have a possible deal pending that I have questions on how to best work the financing. Deal is as follows: House, 3/2, is on city lot at the edge of town. Seller has a recent (2 months ago) appraisal from a local bank for $174K. He got that appraisal when he refinanced. Now his health is bad and he is moving to a warmer climate (we’re in Wisconsin). House is immaculate, best I’ve seen in 3 years. This house sits in the center of the block on a dead end street at the edge of town. Behind the house is a strip of land approx. 150 ft. wide and it runs the entire length of the block (approx 3.12 acres). Seller also owns this free and clear. He will sell it along with the house and has agreed to do owner finance on the land amortized 30 yrs with a five year balloon, however he must cash out the house to buy his new house out west. Behind the land is a park and wetlands. Other property owners on the block want to extend their yards (REAL BAD) to the park boundry and will pay well to do so.He will sell the package deal for 249K and finance 80K on the land. My question: Wife and I have good jobs and 725+ FICO each. Currently own 2 houses free and clear, including the one we live in, which is in the same town. Make 81K+ per year, with payments of 894 for 18 more months on vehicle. No other debts. 50K+ in cash available. So, we are not sure which way to go. Do we (1.) Just borrow 80 percent of the house purchase price and then take the owner financing on the land, or (2.) Take a bridge loan on our current house and a smaller loan on the subject house, or (3.) Lease option our present house, using the payments to help pay loan on new house (possibly getting a homeowners line of credit on the existing house)? Local bank has said they will only credit 75 percent of lease option money towards cashflow. I’m sure there must be other ways, but I’m drawing a blank. What do you think?
Thanks for the time and the help,
BillW