Posted by Dave T on May 16, 1999 at 15:59:38:
If you are offered the property at the original purchase price, then the seller may not have much equity in the property. If it was originally purchased at $40K with 95% financing, then the seller’s equity may be under $3000.
How much is still owed on the mortgage? Can you pay cash for the seller’s equity and will the property rent provide positive cash flow after expenses and debt service? If so, purchase the property “subject to” the existing mortgage and offer the seller cash for his equity. Since the seller already has a place to live, he may not need a lump sum cashout for his equity.
Offer to pay his equity in 6 monthly installments of $500 beginning three months after closing. The rent income may be enough to put a significant dent in the first few installment payments.
I’m sure that others will have suggestions for alternate approaches to this deal.