Posted by Wayne (MD) on March 07, 2001 at 08:36:24:
I?m just thinking on paper here so read this in that light. Your need for cash and your experience with the tenants will be important in the following possible solution, however if they have been dependable, you might consider:
Determine the amount of a legitimate down payment, such as 10% ($2,850).
Have them come up with as much as possible toward that amount, say $1,000.
Write a contract for deed for 90% of the purchase price amortized at, say, 9.5% which would be $215.68 per month.
Write a note or a second on the balance of the down payment, $1,850 in this example, and have them pay that off at 14% over a 1-year period at $166.11 or a 2-year period at $88.82.
When the down payment is paid off, have them finance through traditional channels.
The disadvantage is that you don?t get all your cash up front right away. The advantage is that you?re getting a nice return on the equity and have been resolved of landlord responsibilities.
I have one tenant I would do this for in a heartbeat; I have others I would never consider such a plan for.