Here’s One - Posted by Frank Chin
Posted by Frank Chin on March 21, 2001 at 09:28:55:
Hi Merle. Here’s one for you to chew on.
I’m currently selling a number of properties. I place two properties for sale in December last year. In New York City, I got one offer the first day, and another the following weekend. Closing is anyday now and the buyer is anxious. The market is hot here.
I expect a longer haul in Springfield Ma. I’m told its more a buyer’s market and properties can sit for a year. I listed the property in December with an agent and nearly a dozen people came by. One buyer was interested but was looking to have a grant from the city for the downpayment. But because its an upscale condo, it did not quailfy. Got no offers.
Heres some numbers:
Condo Unit: 1BR/1 Den/1 Bath (upscale historic)
On market: Since December 2000
Asking price: 69,000 (reduced from 71,000)
Comps: 65,000 to 70,000
Rental: 575/month (tenant moved in January)
Mortgage balance: about $32,000
Original Purchase price: $42,000
The agent claims the bad weather, and Springfield had a lot of snow. The listing was just extended to May. Based on what I see, I doubt it’ll be sold by then. So I’m thinking:
After May, we’ll dump the realtor
1- We finance the 10% downpayment by taking a second.
The buyer would get a 90% conventional mortgage. We’re not even worried if the buyer doesn’t pay the second mortgage as we’re still walking away with a good profit.
2- We pay off the mortgage of 32,000 and offer 100% financing for the entire selling price.
We move the selling price back to 71,000 and do 100% financing. Then discount the note. We realize discounts run 15% - but we still have a good profit.
My wife is little leery of assuming the financial risk and foreclosure.
I don’t know if a wrap would work in a condo situation.
We thought of doing this, as prior tenants went on to buy other units in the building. However, we rather do a direct sale at this point because the unit is in very saleable shape as it was totally redone prior to the last tenant moving in. It’ll have to be redone if rented out again.
With a L/O the T/B may not qualify for a mortgage and we’ll wind up looking for another T/B. If this is the case - we’ll rather rent it out a few more years.
4- Continue Renting
There’s a new courthouse going up across the street. the consensus is that the value should go up - which I beleive is a good selling point.
So what would you do ???