need the best investors to look at my plan - Posted by jffolijr
Posted by jffolijr on July 31, 2003 at 04:54:49:
Ok, here?s the deal. I have a deal I can close subject to or with an option how do I want to write the paperwork up?
The property: 2br/1.5bth 2nd story condo Sq. Ft. 1063 1 car garage + extra parking space.
Seller: Owes $137K on a two year old loan (private lender). With payments at $800. per month. + $200. per month HOA. + $1,525. per year for taxes (roughly $128. per month) for a total of $1,128. per month. Wants about $20k to walk away. Has 5 kids in this condo! Wants to move up to larger place, rent and save till they can qualify for a loan.
The listing: 2 months into a 6 month listing and a $175K-$180K price. Sellers want to cancel, listing agent says ok, no problem. By the way they called me from my ad. I told them I wouldn?t do anything with them until their listing expired unless they had retained the right to sell themselves. Hey, I don?t like being backdoored either! If this works out I will think about giving the agent a finders fee or something. Anyway they called me back about a week later and the conversation goes something like this ?we are going to cancel with the agent and want to deal with you. We?ll take $10K to walk.? It was a little lengthier than that but you get the idea.
The Lender: I had asked them what the lender?s position on all this was i.e.; did they think he would care if they rented, optioned or subject to-ed the property? they said the lender said no problem just keep the payments coming. Also asked did they think the lender would sell his position for a discount? When asked the lender said no.
Market Analysis: the area maybe a little slow. I determined this by a few things, namely the 2 other condos, almost identical but priced a little less that are still for sale. One of which was listed at least 2 months before our subject property listed with the same agent @ $167K. now, this could be the fault of the agent, but I doubt it (I have my reasons). The comps I ran support the price the subject property is listed at ($175K-$180K, remember?) but I think that it would move with a little bit better price ($159K with no qualifying).
Rent analysis: rent will be verified this weekend, but I think we are a little high at $1128. Rents should be right around $1,000. per month (still not a problem with no qualifying financing in place). By the way our market is hot right now (key words ?right now?).
Me: I wanted to try and do this the smartest way I could with the least of my own money out of pocket. I wanted to do a lease option but the sellers need the money to move so it is going to be hard to show it and collect an option payment before they move. No go. I thought about bringing in a partner for the $10K. Too skinny. Then it hit me!
The Plan: Sell to a non-Qualifying buyer at a below market price ($20K below) for $159K with $16K down and monthly payments at $1199. with a 30% rent credit to be paid off in 18-24 months. Only cost is ad money and gas. I can show it with the people in the property (it is in good condition, fresh paint, new carpet) take $10K down to hold and stop my marketing, with the other $6K plus first months ?rent? due upon move in. $7K to the seller upon moving out and the other $3K due upon the tenant/buyer moving in.
Outcome: if done right though a small deal I?ll actually see a decent payoff for almost no work. My price $147K. Buyers price $159K = $22K. minus the $10K for the sellers = $12K. My monthly Pymt $1128. Buyers monthly Pymt $1199. = $71. per month. At closing the Buyer pays $144K or $159K minus the $15K. Don?t forget the 30% rent credit totaling approximately $6,475. take that away from the $144K and you have $137,525 ($525. more than the loan), but because the loan is being paid down $800.P/I per month, it will be less than $137K, not by much(remember the loan is only two years old). $800. x 18 months is $14,400. how much I?ll get of that I don?t yet know.
I want to write the paperwork up right so I?ll get all the benefits and the least chance for error. For example I want the loan pay down. Please take into consideration all these factors and let me know what you?d do And what I should watch out for. also how would you write the ad?