Re: Possible Deal — Need Input From a Pro - Posted by vince
Posted by vince on January 07, 2001 at 22:43:18:
Thanks for the follow-ups! I thought I’d answer your questions so that you get a better picture of where I’m thinking of going with this deal. PLEASE stop me if I’m headed for a cliff (smile).
I don’t have any cash.
My credit is not so good.
So I’ve come up with the following brainstorm:
Here’s a scenario I think might work:
Property Value: $75k
Property Income: $1200 per month
Seller’s Asking: $35k Cash (thus the discount)
1.) Tie up property ASAP
2.) Offer the $35k cash
3.) Get 90 days to close
4.) Put property on market to investors immediately for $66k with the following terms (with mortgage I create at closing):
a.) $10k down payment from new buyer
b.) Create a mortgage of $56k amortized over 30 years at 9-11% with a 5-7 year balloon.
5.) Locate new buyer (investor) with decent fico (or whatever a note buyer would need) and the $10k down.
6.) Sell Note at closing discounted to 80% LTV (56k x 80% = $44,800)
7.) Give seller their $35k at closing from note sale proceeds (leaves $9800 on the table)
Result: $10k down (to me) + $9800 (to me) = $19,800 less any RE broker’s fees for quick listing and sale (unless I find an investor through other means)
Does this sound like a doable deal? (barring any hidden skeletons, of course). And did I figure the down payment right? Does that $10k go to me at closing or does it go to the note buyer? Are there other alternative ways of doing this deal that might go smoother and quicker?
I have learned enough from lurking on this board for 3 years to finally be ready to make some moves and I owe it all to the selfless attitude of the people who frequent this board. If this deal goes down, I will be yet another living testimony to the reality of creative real estate.
By the way, my return on investment will be “infinity!”
I still have to figure out where the earnest money is coming from and how much to offer! UGH!!! (smile)
Thank you all soooooooooo much!!!