Need Help Structuring First Deal - Posted by Keith (AL)
Posted by Keith (AL) on June 06, 2000 at 14:10:36:
Hi everyone. This site is a tremendous resource and I would like to thank everyone for the info I’ve received here. Now on to my problem.
I have entered into a L/O on two new homes with the builder of the homes. These are upper middle class homes in a very nice neighborhood. On the house in question I have agreed to pay $1450/mo Lease for 12 months with a $164,000 option. The house has been listed for $189,000 and is comped at $181,000.
I have found a prospective T/B who has agreed to pay $1550/mo with a $189,000 purchase option. She is receiving Social Security money for her 3 grandkids (mother & father dead). The husband is retired military and also works for a local company. I think they can pay the monthly rent.
They can probably be approved for a VA loan at 95-100% LTV if they didn’t currently own a property.
Here’s my problem. I’ve requested a 5% option consideration ($9450). They don’t currently have the full down payment but have proposed to pay $1000 down and provide a promisary note on their current home for the balance. Their current home (according to them) is worth $110,000 with a first and second mortgage total of $93,000. So they can’t sell this house using a Realtor (not enough margin).
would you allow them control of a $180,000 +/- home with only $1k down and take a 3rd position on their current home?
would this deal be more attractive if I entered into a L/O on their current home? Sort of like playing dominos. I find a T/Ber to Lease and subsequently purchase their current property, they pay me my down payment get a loan for the new property exercise their option. I then pay the builder by exercising my option.
It looks to me like there’s $25k profit - closing costs if this deal could be structured correctly. There’s also the possibility of making a little by L/O their current home too.
Any insight into how to structure this deal would be greatly appreciated. THANKS!