Posted by Vic on April 10, 2000 at 01:54:55:
Hi everyone. I came across a deal (?) today & wanted to get some creative ideas on how to put it together.
The property is located in an area that is appreciating like crazy (22%) last year alone. People are paying $150-$200K for perfectly good houses that they can tear down & build $800K homes on. There’s no vacant lots in this high demand area, so people are paying exorbitant prices for houses, just to get the lots for the new constuction. Crazy!!, but it’s happening.
Ok, here’s the situation. I called on an ad in paper today. The guy said he had 2 duplexes & a single for sale, all built on same lot. The properties cannot be seperated & sold off. Total rents coming in $2500/mo (could probably go to $2700). These are very old houses, but seem to be in decent shape & in a good area for rents as well. The seller is 67 yrs old, & is retiring & moving to CA. The asking price is $225K & he is pretty firm on price, but very flexible on terms. The land value alone, without the 3 little houses is about $150-$180K all by itself. The seller wants to sell these with 10% down & he wants to carry the balance at 8%, amortized over 30yrs. with a 10 yr. ballon (he doesn’t want to get hit with the capital gains tax). Also wants a 5 yr. prepayment penalty.
This seller has done his homework & was very knowledgeable & even prepared a detailed 4 pg. report, that pretty much answers any question you could have about the property.
He’s also met with his acct. & lawyer & together they arrived at the financing listed above. The seller has indicated that he does not need the cash from the 10%down pmt. up front. I casually asked him if he’d consider $2k a month for the first year, all to go to principal for the down pmt., with no other mo. pmt. After the first yr., the regular monthly pmts. would start for the balance of the loan. He said he’d consider it. Very flexible on terms, but firm on price. I think his asking price could be higher for this area. An appraiser said ttl. value anywhere form $230 - $310K.
My question for you’ll is - can you’ll think of any other ways to come up with the down pmt or get this deal done.
The avg. maintenance expense for the last 3 yrs. was $2700 yr. Taxes would be about $2200/yr. Ins. about $1200/yr.