Looking For An Investor - Posted by Kelly Martin

Posted by Sean on April 13, 1999 at 20:54:47:

Who holds the 80 and who holds the 20% loan?

There’s a technique mentioned in the cash flow forum that might help you. It would work easiest if the 80 percent mortgage is held by a private party but it is still a possibility if only the 20 percent one is held privately.

Let’s assume you owe $47,500.00 (the 80%) to a private person. You would look for a note with the same or higher interest rate and worth about $47,500.00 face value. Many people who buy & sell notes can make a note the right size for you once they know the interest rate you need by cutting larger notes down to the size you need.

Let’s say the note has a face value of $47,500.00 at 10 percent interest paid out over 30 years. You agree with the guy who owns the note to buy it for $39,050 and you agree with the guy who holds the $47,500 mortgage to trade the note you’re going to buy (face value $47,500) for the one he currently holds (face value $47,500, better interest rate and safer – better loan to value).

Get it from both guys in writing, then go to the bank and get an 80 percent loan on your 70,000 house ($56,000 total). Use $39,050 to buy the note (leaving you with $16,950 cash left over). That note pays off your 9.75% first. Use the $16,950 to pay off the $11,500 second, which leaves $5,450 cash to put into your pocket.

Don’t know where to find a note? Call those ads in the paper, the “I BUY NOTES” people and ask them if they’ll sell you one. Tell 'em you need one face value $47,500, paying at least 10% interest and ask 'em how much. If they don’t have one the right size, tell them you’ll buy a partial of a larger note if they’ll cut it up for you.

Looking For An Investor - Posted by Kelly Martin

Posted by Kelly Martin on April 13, 1999 at 20:18:09:

I bought my first rental property last September. I used very little of my own money and ended up with two mortgages.
80&20. The purchase price was 59,000 and the property appraised for 65,000. So far I’ve updated the electric and plumbing and believe the property should appraise for 69 to 70,000 which is comparible to other properties on the same street. The first mortgage is 47,500 at 9.75% and the second is 11,500 at 11%. I’ve been looking for someone to refinance with but the loan to value that everyone is offering is 70 to 80%. Is there someone who knows of a broker or bank loan rep. that would be intrested in helping me refinance at a 90% loan to value. Any suggestions would be appreciated. To everyone who views the best site on the web!