Need help selling a Texas home - Posted by Mat

Real Estate Investing
1

Posted by dutch on May 03, 2006 at 15:06:59:

Texas has some crazy laws. Here in OK, I would sell on an installment land contract, keeping my underlying mortgage, and sitting in the middle.

You can do the same in TX, but you will probably have to sell on a mortgage rather than a contract for deed. Same thing, it’s a “wrap”. Your buyer’s mortgage wraps around yours, and you collect the difference.

I would put a short fuse on it, say a 2-3 year balloon, or like my friend David Alexander (in TX) does, he starts at a low interest rate, say 8.9% and goes up a full % each year until it is so painful they HAVE to refi you out.

Dutch
OKHomesavers

2

Need help selling a Texas home - Posted by Mat

Posted by Mat on May 03, 2006 at 13:21:07:

I have recently bought a foreclosed house in Katy Texas (Houston suburb) and
did a cosmetic rehab. Now I’m having trouble selling it because I’m competing
with a brand new development in the area. My house is 3bd 2 ba about 1900
sqft and with the help of my agent trying to sell it for 120k. The house has been
on the market at this price for the past 6 weeks and no interest yet. If I lower the
price I would lose any possible profit. I’m now thinking of leasing it or doing a
lease option. Also my curent mortgage is high at 1200 but its an impound
account. Any help suggestions would be greatly appreciated.

3

Lease Options are a Thing of the Past… - Posted by David Alexander

Posted by David Alexander on May 04, 2006 at 22:08:35:

in Texas…

The simple truth is that if it ain’t selling… that’s the market telling you… your not priced right… lower your price and/or terms…

Or you don’t have enough traffic…

Place ads, put out flyers, put out banditsigns, and tons directionals… get creative…

4

Re: Need help selling a Texas home - Posted by dutch

Posted by dutch on May 03, 2006 at 13:34:33:

Sometimes, you take the loss, chalk it up to education.

Sell it owner carry (wrap). Usually you can get a “premium” price (5-10%) because you are carrying the note for someone with bad credit. Plus a higher intrest rate.

L/O is another way, but personally I find those harder to sell, and you are still a landlord.

Good luck.

Dutch
OKHomesavers

5

Re: Lease Options are a Thing of the Past… - Posted by dutch

Posted by dutch on May 07, 2006 at 12:08:45:

David. See you in Denver. You still owe me!

Dutch
OKHomesavers

6

Re: Need help selling a Texas home - Posted by Joe

Posted by Joe on May 03, 2006 at 15:10:10:

How does the paperwork work on a wrap? Say there is an existing $100k loan (and security instrument) on a $120k property. And you sell via owner financing for $130k (premium for bad credit), how do you record your position? Do you just record another $130k security instrument? Then there are $230k worth of liens on the $120k property. Seems kind of odd. And since you’re not cashing out the first loan, it’s not going to change.

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Re: Need help selling a Texas home - Posted by mat

Posted by mat on May 03, 2006 at 13:42:05:

Thanks Dutch. Does that mean I keep my existing loan (or can refi) and
who then holds title? This is my first time doing a more creative deal.

8

Denver? - Posted by David Alexander

Posted by David Alexander on May 07, 2006 at 16:45:53:

You going to Bronchicks Info/Seminar Gig?

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Re: Need help selling a Texas home - Posted by dutch

Posted by dutch on May 03, 2006 at 15:25:31:

No, no, no. Listen up grasshopper.

There would only be 130k worth of liens.

The 130k mortgage wraps the 100k mortgage. Part of the payment goes to pay the 100k, the other goes to the holder of the 130k note (you!). The original loan 100k is in first, the wrap is in 2nd, but since you hold it, who cares? You are the one making the payment to the 1st.

The real beauty of a wrap is the “interest on interest”. Say the 100K is at 6% and the 130K is at 10%. Both are 30 year notes.

Payment on 100K note is 599.55/mth
Payment on 130k note is 1140.84/mth

THAT IS $541.29/mth CASH FLOW!

You send the $599.55 to the original lender, and pocket the rest.

If the buyer defaults, and you would know first, since you are collecting the payments, you foreclose. The 100K note sits there, and foreclosure is “Sub2” the 1st lien. If the property sold at Sheriff’s sale (you chose not to buy it), for $110K, 1st lien gets their 100K, and you, 2nd lienholder, get 10K.

Lets say the seller had owned for 24 months and then sells to you for 100K, and you resell immediately for 130K.

The note you just took over Sub2 is 97,468.24, first payment is 111.65 principle and 487.90 interest.

Your note is 130K, first payment is 57.51 principle and 1083.33 interest.

So, your buyer is using interest money on his note to pay down principle on your note! Now isn’t that just way too cool.

It’s like Double Compounding!

Dutch
OKHomesavers