Ex. Owner owes 50,000 on property, you agree to purchase for 55,000. He keeps loan in his name and you begin making payments, after signed lease option contract with 2 year payoff, of course. You fix it, while making payments…Place ad in paper “No Bank Qualifying” Owner financed, 3bd/2ba, etc. When people call you prescreen and require at least 5% of sales price down. (i.e. Selling price 65,000.) You take a buyer and see if they have good credit. If they can get loan, make them. They give you down payment and you close the deal with your seller at the Title company and then have buyer there the same day…15minutes later, and they give you their bank’s check. You payoff seller 55,000, and buyer pays you 65,000…you pocket 10,000 and send me a check for 2,000. =O) Hope that helps!
P.S. Check with a title company and see if they’ll do that “simultaneous close”. But make sure your buyer has signed a Purchase Agreement.
Posted by Teresa on September 08, 2003 at 13:52:04:
My husband and I have an opportunity to purchase a townhouse/condo for $120 and we believe the property (with some cosmetic fixes) could be sold for around $160. The house is currently rented and the owner lives out of state and uses a management company. He just wants “out” of the house and does not even know what it is worth. We have plenty of money and equity in our current home to do it - but what is the next step and the smartest way to move forward. We are thinking we would get a real estate agent to write a contract for us (about $500) and then move forward with a mortgage broker to finance as much of it as possible…help and advice?!
Brent is right you don’t need an real estate agent. If your worried about writing up a contract, you could have an attorney do it. But you can simply write a letter to the owner offering to purchase the property to break the ice. And after you both are in agreement, put it on paper and take it to a lawyer or title company that will handle the closing.
One thing you didn’t mention, does the renter know the property is for sale? if he does, you might think about selling to him giving terms. I wouldn’t go to the renter if he doesn’t know about the sell. He might create problems with the owner and you started it by telling the renter.
Posted by Brent_IL on September 08, 2003 at 15:45:12:
Real estate agents sell houses. You don’t need a RE agent. Find a lawyer who specializes in real estate transactions and tell him or her what you want to do. The attorney will make it happen.
As Matt suggests, if the owner will do a subject-to, go for it. Otherwise, tie up the property and contact a mortgage broker.
Are the cosmetic repairs truly minor? Can you make the cosmetic fixes while the tenants are in residence? Do they have a lease that would prevent a quick resale to an owner-occupier?
Maybe the owner will give you an extended escrow and the right to make repairs before closing. If he does, protect your money with a mechanic’s lien.
Ask owner if they will finance, or if you can buy it subject to existing mortgage, you make the ongoing payments. Put a 2 year lease w/option to buy and a balloon on it and fix it up and flip it to buyer.
This way you only pay a few payments while fixing and you can sub-lease or sell it off using his money, not yours. Avoid the use of your own money if possible.
Less risky!