Posted by Michael Morrongiello on April 19, 2000 at 10:52:56:
You starting the LTV of the owner financed mortgage out at too high a starting LTV (90%). I would suggest you START the mortgage LTV out at 80% ($49,600.00) and no more than 85% Max. You would then hold a larger 2nd lien. Also that interest rate of 12.75% can be reduced to make it more attractive to prospective buyers. A 12% rate will work just fine.
Try to qualify the employment stability and credit of the buyers as these will be important issues in creating cash liquidily for your paper sooner rather than later.
In fact, thats one of the BIG advantages in owner financing the sale rather than selling using a lease option. If you need to or want to your owner financed paper can be coverted into CASH much sooner than having to wait and find out whether your tennants will actually excercise their option or can even obtain financing down the road to complete the purchase of the home.
You get cash out today and can move on down the road to do more deals…
To your success,