Posted by Michael Morrongiello on February 24, 2000 at 18:59:24:
IF I am to assume that you are to put no money down then one way to structure this with the seller is to convince the seller to hold (2) two mortgages. A very conservative $25,000.00 1st lien that can be written at lets say 11% and amortized over 144 months payable $313.39 per month. This note would be sold to generate the seller his $20,000.00 +/- cash that he desires. The seller would also hold a 2nd lien that you can negotiate with payments, interest, and for an amount that is acceptable to him / her. This 2nd lien note would produce monhtly income to the seller and woudl remain in 2nd lien poistion until such time as your refinanced all debt against the property or paid of that $25K 1st lien.
If the property truly needs $20K for improvements then the size of the 1st lien could be increased to allow for more cash to be generated. The seller should be comfortable sitting behind such a small amount of debt in front of him / her especially since you are putting funds into the property to upgrade it.
Remember when you are buying property with NO cash down, the level of exposure a lender or note funder is going to be comfortable at will have to be conservative.
If you need more input contact me and we can “tweak” this structure.
Make a contract offer or send a “letter of intent” offer to test the waters to see what the response is.