Need some advice - Posted by Rosalyn_MD

Posted by Rosalyn_MD on April 12, 2000 at 08:41:49:

Thanks,
I will let you know how it goes. His time line is June 30. By the way I don’t have the $5000. It will rent for appr 1200-1250.

Need some advice - Posted by Rosalyn_MD

Posted by Rosalyn_MD on April 10, 2000 at 11:25:02:

Hello everyone!

I am a newbie and I have been reading and digesting this site practically everyday since late Feb. I have a r/e agent that is working with me and she gave me these facts:

The seller is motivated b/c of debt relief and he is willing to L/O. However, he wants $5000 cash for another property. We already have a qualified L/O with a deposit of
$1750. How would you suggest that I work this through.
P.S. The seller is also going thru a nasty divorce. He is not willing to except a smaller down payment and take the rest in a note.
Any advice or suggestions will be greatly appreciated.
Thanks in advance.
Rosalyn_MD

Re: Need some advice - Posted by JBinMD

Posted by JBinMD on April 10, 2000 at 12:46:58:

Hi Rosalyn,

We may need some more information, there isn’t enough to go on to decide whether or not the $5K he wants is unreasonable. Is this a $95K house or a $400K house? What is your strike price? What are the comps in the neighborhood? If you don’t have the $5K, will he accept some sort of trade? How long is he willing to L/O the property for (ie - for how long can you tie it up)? A good question to ask is “Mr. Seller, are you telling me that if I don’t pay you $5K in cash right now that we can’t make a deal that will relieve you of your debt?” (A version of Ron LeGrand’s famous question)

Another idea, if he absolutely won’t budge on the $5K and you don’t want to put it up, is to have him refinance the property, with an Adjustable Rate Mortgage, and let him pull out his $5K that way. Just make sure he doesn’t overleverage it (like 110% of FMV)then agree on the strike price and you will be in for no money down. This assumes of course that he has equity in the property.

Just my .02

Best of Luck,

Jason

Re: Need some advice - Posted by Rosalyn_MD

Posted by Rosalyn_MD on April 10, 2000 at 14:43:40:

His asking price is 135,900
Appraised about 1yr ago @ 130,000
Comps in the area arn’t very good.
payment of $1186 @ 8% (1st mtg)
2nd mtg @ 14%
payoff of 130,000

seller has painted inside and out
replaced the furnace and the hot water heater
new carpeting

the house is 4/br 2/ba brick, deck, fenced yard
p.s I forgot to add this in the earlier post.

Re: Need some advice - Posted by JBinMD

Posted by JBinMD on April 11, 2000 at 14:51:38:

Rosalyn,
So obviously my idea of refinancing is out. I am questioning how motivated he actually is? He won’t budge on $5k down, yet needs debt relief. He is only asking for 3.7% down, which I believe to be reasonable, but of course you don’t really want to pay anything down. What would the place rent for? It doesn’t sound like there would be much of a spread for you to collect after the mortgage is paid every month.
The only spread you would get would be your tenants down pmt minus yours and whatever you worked out as a strike price with your tenant minus yours.

A better idea might be doing a ‘subject to’ the existing financing deal. That way you could give the down pmt that he needs (try not to give him all he wants), after you collect from your tenant, then try to negotiate with the leinholder to try to get the 2nd mortgage reduce to pennies on the dollar (you didn’t say the value of the 2nd). Once you show the bank that he is going to be foreclosed and that they will be wiped out, they will negotiate with you. Also, this way you get to keep all the equity that will be made available after the 2nd is reduced. Tha would nale this a better deal. Let me know what you think.

Jason