Please look at this... need creative solution - Posted by Jay (MI)

Posted by Len on July 02, 2003 at 13:16:03:

Even at 85% LTV on a property that is fully leveraged? Wow…I need friends like yours.

Cheers,
len

Please look at this… need creative solution - Posted by Jay (MI)

Posted by Jay (MI) on July 02, 2003 at 07:56:00:

Okay, I get a call last night from a freind. His sister’s “partner” got a DUI and they need to move so she can be closer to her job. Problem is, they can only qualify for an 85% loan. Can I help? We discussed me possibly getting the loan at 95% and having them pay the 5% down plus closing costs on a local house. They would then lease option the house from me for PITI+$200/mo, and purchase the house in the future at purchase price + 10%.

Let me start by saying, I do not like to have any loans in my name, just kind of kicking this around.

Any creative solutions out there?

Thanks - Posted by Jay (MI)

Posted by Jay (MI) on July 03, 2003 at 08:55:56:

Thanks for the replies guys - No exactly sure where I am headed on this one, will porobably pass at this point.

Is This Creative Enough?? - Posted by Randy

Posted by Randy on July 02, 2003 at 09:55:56:

That?s no different than any other L/O? maybe better because at least you know your T/B going in. Another option with a lot less risk for you (and still a little profit) is to find a house they want, flip it to them on a seller financing note (simultaneous closing) 85% LTV. Then sell the note. You would carry a 2nd for the difference needed.

Property Appraises at $100,000
Your purchase price is $80,000 (All Cash quick close so you expect a discount)

You flip it to your buyer for $100,000 This means when you resell the property you?ll be creating a new first mortgage for the buyer equal to 85% of the sale price and the buyer will be putting down 5% of their own money. You carry a $10,000 2nd. (Pure profit).

New First Lien $85,000 First Lien purchased by investor for $80,700
Down Payment $5,000

Total Cash in Transaction $90,700 ($80,700 plus 5K down payment)
Second Lien $10,000 Payable monthly to you with interest
Purchase Pay off $80,000
Your Cash Profit $15,700

If you want to know exactly how to do this and sources to finance it email me directly.

Re: Please look at this… need creative solution - Posted by Frank Chin

Posted by Frank Chin on July 02, 2003 at 08:20:13:

Hi Jay:

We got several TV here in our business, and we watch most of the court show: People’s Court, Judge Judy, Judge Mathis etc. etc.

And the most common Court cases that comes up involves a friend or relative getting a loan for someone who can’t qualify for a loan.

Mores often than not, the person borrowing is irresponsible. The person is now going to be suddenly responsbile to a FREIND?? Not likely.

If the DUI is any indication, the person still haven’t learned responsibility.

A long ago uncle cautioned my dad about lending money to friends and relatives when I was a small boy. He said “They either get mad at you for NOT lending them the money, or having the nerve to ASK FOR PAYMENT.”

When he got older and wiser freinds were mad at him not lending the money. When he was young and foolish, his freinds were mad when he asked for payment.

He asks “If they’re going to be mad anyway, I might as well not LOSE ANY MONEY”.

At least, that’s my 2 cents.

Frank Chin

Re: Is This Creative Enough?? - Posted by RV - TX

Posted by RV - TX on July 03, 2003 at 12:20:49:

Could you email me directly on how to do this deal and sources to finance it?

I am in a very similar situation.

Thanks

Re: Is This Creative Enough?? - Posted by Len

Posted by Len on July 02, 2003 at 10:25:18:

Interesting idea.

I’m wondering whether a note buyer will buy a BRAND NEW note with no payment history for 95% of face value.

Seems unrealistic to me…but maybe that’s just me.

Cheers,
Len

Re: Is This Creative Enough?? - Posted by Randy

Posted by Randy on July 02, 2003 at 10:33:38:

Yes? No seasoning simultaneous closing.