Need Creative Options on this one… any ideas? - Posted by Harley-CA
Posted by Harley-CA on January 29, 2001 at 20:12:00:
Hello again everyone. I have a seller who has the following scenario:
Custom home (2 br 2 ba) appraised at $313k (build 1960)
Upgraded in 1995 (very nice work done)
Seller wants to sell it for $230k, which will pay off the underlying 200k loan and he will carry the 30k in the form of a note.
Here’s his problem:
he existing loan is hard money due in a year
the payments on this loan are outrageous
The area comps are newer, bigger, more bedrooms and are priced at around 240k!
The home has been on the market since September with very few bites. By the way, it is a lakefront property.
The rents in the area would only support about $1200 per month max (not enough to cover the payments on a 30 year note if the property were deeded to me and I were to refi at 80% of the appraisal value which would be $254k and the P&I alone would run around $1800 per month.)
My recommendations are as follows, tell me what you think or what you would do differently.
1.) Take property off sellers hands by getting the deed, refi’ing the house to pull out enough to cover the existing, any prepay penalties and closing costs on new loan. The home’s appraisal will support taking out much more money but that’s would lead to a serious negative flow. Then, I would simply let the seller walk away with his credit intact (he doesn’t qualify for a refi because he’s not working or doesn’t have an income). Then, after refi’ing the house, I would have a payment around $1468 per month. I would then lease option the property for $$1600 per month with an option consideration of $5000.
Problem is, if it sits on the market for any length of time, I’ve created a monster!!!
What would you do in this situation? This one’s gonna take some serious creativity!
The upside is the appraisal value of the home (it’s a really nice home). The downside is that the market for this type of home seems to be in a slump due to newer homes in the vicinity.
Looking forward to hearing from the chorus of great creative investors here. How do we solve this seller’s problem? Don’t ask where the property is located (smile).