Re: Is this rehab. worth it? - Posted by JPiper
Posted by JPiper on January 17, 2001 at 14:57:57:
OK Ben, now I?m confused. You?re thinking about putting a new loan on the house, and this is where you got the $1200 payment? Or you?re thinking about financing a new buyer? And what does it have to do with anything if the existing loan is a ?qualifying assumable??
First, if your idea was to put a new loan on the house so that you could sell it retail over the course of the next six months??WHY??? Loans cost money Ben?.money that you didn?t reflect in your profit projection?so add that to the list. Why not take the loan over subject to??? Use a land trust to do it. I know you?ve been here at the newsgroup for a while, so I assume you?ve seen the technique mentioned a few times.
As far as your concern over a potential buyer?.I don?t know your market. I don?t know if a house is cheap or expensive at the $190K level in your market. I assume you do. In fact, what you?re proposing to do is sell the house retail?.so evidently you must have reason to believe that it will sell for $190K (you did see comps didn?t you?). Assuming you did see comps, then clearly someone is buying those houses Ben, and can afford a payment higher than $900 per month.
I?m not suggesting that you lease/option the house. I?m suggesting that you use a form of owner financing to SELL the house. 5% down puts $10K back in your pocket. 10% down puts $20K back in our pocket. Something between those numbers is going to put everything you took out of your pocket back into your pocket to get into the house to begin with?..assuming you took the loan over subject to.
But financing $190K with $10K down Ben, at 10% interest the PI payment is $1650. Is there anyone who might want a deal like that??? Can?t tell you Ben?.I don?t know your area. And I wouldn?t suggest that you attempt this UNLESS YOU know your area. But imagine the guy who buys the $200K house for a moment. He has to get a new loan?.it might cost him 10% down PLUS closing costs. Your deal doesn?t have the same closing costs. Granted, your rate is higher?.but maybe to someone self-employed this rate won?t look so high. Subprime loans might be this high, or even higher?.perhaps 11%-12%.
Your call Ben?I?m just showing you another way to do the deal that might make the deal sell a whole lot quicker. Again, I don?t know your market. And by the way, I wouldn?t be getting a new loan to do your deal. I don?t think your deal is good enough to warrant the extra risk exposure or costs.