Posted by Paul Macdonald on November 25, 1998 at 09:17:58:
Best places to look are your local banks. They must be FHA & FHA Title One endorsed. You’ll find one probably within your first five calls (as long as you ask for help from the banks that cannot help).
Next best place would be an approved broker/lender with the same criteria. They’ll just be a little more expensive ratewise probably.
It really will pay if you check your local market first, but if you cannot find one email me and I’ll see what I can do for you.
Posted by Kevin(OK) on November 24, 1998 at 10:40:22:
Out of town owner of a house that has been listed with a Realtor for 1 year (expired). My comps say it is worth $171,600, owner says appraisal came in at $167,000. The problem is this house needs $10K in foundation repair (20 piers, I posted this info. on the newsgroup last week). The above mentioned appraisal, was done before any visual defects started to show. I offered the owner $120K as-is on a L/O for 5 yrs and $1,100 per month (his mortgage payments). The owner is motivated due to the fact that he is paying two mortgage payments. However, he said he couldn’t go that low, and doesn’t know about the L/O. The owner would rather rent it out and have me manage it (I do not have a RE license) for $250 per month fee. The house next door to it rents for $1800 w/a pool. This house doesn’t have a pool so I am figuring $1600 rent. The owner said the lowest he could go is $130K, and he will have to talk the L/O over with his wife (he became more interested in the L/O as the conversation went on). Is there any other alternative here? Is $130K too much? No option money was mentioned and I made my offer contingent on finding a tenent, so my up front $$ risk is limited. If I am getting good terms, how low on price can I go?
Lease options are normally low equity with little fix up. A 5yr L/O is not much different than an owner financed deal with a 5 yr balloon if he would take the same down payment. With the ownership interest after a year you could do a title one loan and fix the foundation. Or does it need fixed before then? If you think you can attract tenants/buyers with the intent on using the option money and 1st year or so income to pay for the piers then get it signed up.
Profit potential is $167K-10K(foundation)-130K(to owner)+250/mo x 24 months+/- option from buyer. This equals 33K. I’d get the foundation fixed asap, but then I would push for ownership myself. Or will he allow a private second to fix the foundation?
Posted by Paul Macdonald on November 24, 1998 at 20:02:22:
Bud,
Just an FYI, after I read your note I had to look up the guidelines for Title One - There are seasoning restrictions on new construction but I could find no such restrictions on established properties. Your one year rule must be an internal policy with whatever lender or investor you were working with.
A.1 A borrower must have at least one-half interest in one of the following:
(i) Fee simple title to the real property;
(II) Lease of the real property for a term which expires not less than six calender months after the final maturity of the loan; or
(iii) A properly recorded land installment contract for the purchase of the real property.