Details of the deal - Posted by Anna
Posted by Anna on December 07, 2000 at 09:55:08:
I bought the house for $15 cash to the buyer. I borrowed $20 from a private lender; he kept $2 for his fee, $2 was a fee to the mortgage broker who set up the deal (the lender is his rich friend), and $1 went to closing & misc. TERMS: interest only, for 6 months, or until sold, whichever came first. ADD’L COSTS, about $1: inside painted, utilities & insur for 6 months, when I had it listed with a RE agent. VALUE: The RE agent listed it for $38, based on comps. I’ve since advertised it for $28, and got calls, but no offers, except from bottom-feeders. NEGATIVES: It’s in good shape, but in an undesirable neighborhood. REMAINING FIX-UP COSTS: 1) replacing about 30 rotten-at-the-bottom pressed-wood-looking shingles (only if an appraiser says it MUST be done), 2) replacing fuse box with breakers (is this a must?), and 3) fixing front door frame (thugs kicked it in). ISSUE: Need cash flow - need to convince lender to extend loan - convince him that THIS TIME things will work. I could probably RENT it out tomorrow, but I can’t risk someone skipping out or tearing it up. QUESTION: should I advertise for a rent-to-own BUYER? Are they usually good people? Maybe I could throw in a small fee to the lender for extending the loan. Remember, he took a $2 fee up front just for making the loan. If I find a rent-to-own buyer, 1) how can I minimize my risk, and 2) how can I structure things so he’ll feel PAIN if he backs out. He’ll probably be a low-income person with poor credit, so I doubt that I could get an up-front fee. Please think - think - think - and let me know your ideas.