Posted by Brent_IL on January 30, 2002 at 22:09:29:
It’s the L/Oers responsibility to get a mortgage. It may be in your best interest to offer them some guidance. If they can only qualify for a portion of the option strike price you may wind up taking back a second to get some cash, but it’s your choice.
Please help with creative options - Posted by Jay
Posted by Jay on January 30, 2002 at 15:54:13:
I am looking at purchasing a house for what the owner owes + closing costs and his transfer fees. Here are the numbers"
He owes $73K
FMV is $85k-90k (no repairs needed but house is older)
It is currently tenant occupied.
Tenant may want to purchase the home in a year but won’t commit to it.
The owner has an assumable loan (currently 7 1/8%) but as an investor I can’t assume it (unless someone has a suggestion for how)
I can get a 5% down loan at about 9% with no mortgage ins. thru my lender (wife). I would raise the price to get 2% seller help allowed under this loan program.
This leaves me with approximately $50-$75/ month cash flow but that is not enough for me with repairs etc.
Should I try to lease option to current renters or let them continue renting and then l/o to someone else?
I don’t see alot of risk as this is a very rentable area (I own a sfh 2 doors down that brings in $500/mo pos. cash flow.
Any suggestions on financing or your thoughts on the deal would be appreciated.
Thanks,
Jay
Re: Please help with creative options - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on January 30, 2002 at 21:36:08:
Jay–(somewhere)------------------
You could take on the property with the current loan remaining in place. This is called a “subject to” the loan deal. There are many posts on this main bulletin board of the CREONLINE.COM site which deal with this topic. Just put it into the search engine and be prepared for over a 1000 posts.
Good Investing***********Ron Starr*************
Re: Please help with creative options - Posted by Brent_IL
Posted by Brent_IL on January 30, 2002 at 16:39:30:
Not a lot to play with. 5% down + closing costs + transfer fees = lots of dollars for so little equity.
The tenant will string you along because he doesn’t want to move. If he wanted the house he would have committed.
If I really, really wanted to buy, I would insist that the property be vacant prior to settlement. I’d use a final walk-through inspection contingency in case the tenant trashs the place on the way out.
Spruce up the house and find a new L/O or R/B with an owner’s mentality. Get your 5% back at least.
Re: Please help with creative options - Posted by Jay
Posted by Jay on January 30, 2002 at 20:30:15:
Thanks for the reply. I still think I may be able to convince the current tenants (good ones) that they could lease option the home once I bought it. Can you explain exactly how that works…specifically, if they put down $3,000 in option money, do they then get a mortgage later from someone else or am I involved? I am not clear how this works.