Use your “Noggin” to make money…(long) - Posted by Michael Morrongiello American Note
Posted by Michael Morrongiello American Note on December 16, 1999 at 15:16:07:
Assuming your already have closed on the property and acquired it for the $80,000.00 purchase price then It is posssible to do the following:
Sell it for its FULL RETAIL (FMV) Fair Market Value using an OWNER FINANCING technique to move that home FAST, noticed I said sell for FULL RETAIL value. DO NOT SELL FOR AN OVER INFLATED sales price.
Try to attract the BEST credit quality buyers you can. Confirm that they have strong employment stability and that they are capable of putting down AT LEAST 5% ($5,000.00) of the purchase price and perferably 10% ($10K).
Explain to them that you will Get them in the home FAST with a more streamlined and painless process than a traditional mortgage lender will require. That they will have to pay a sligthly higher “off market” interest rate on the financing, however there will be NO prepayment penalty in the mortgage so that after 12 month +/- of timely payments they should be able to refinance your mortgage to the VERY lowest rate loan they can qualify for …
Here is then how the deal shakes out:
Remember your acquired the home for $80K
Sales price to owner user buyers who have strong credit and employment would for $100,000.00
Sales Price $100,000.00
Down payment (5%) - 5,000.00
Seller held 2nd lien - 5,000.00 This 2nd you retain
Seller held 1st lien $90,000.00 This 1st is sold
TERMS of the $90,000.00 (90%LTV) 1st lien:
10.5% amortized over 30 years (360 months) payable $823.27 monthly P&I, no balloon payment and no prepayment penalty.
ANI will fund somewhere between 92% ($82,800.00) to 95% ($85,500.00) for a deal like this as a GROSS funding amount.
You simply pay off any underlying debt (this means that you do not have to do a wrap around mortgage) from these proceeds.
You Keep the following:
Buyers down payment $5,000.00
Cash from sale of note + $85,500.00
Sub Total of cash 90,500.00
2nd lien mortgage retained + 5,000.00
Grand Total $95,500.00
This seems to produce the 8% or more that your after by moving right through the property and quickly selling it.
American Note does deals each and every day like this. Call us to consult with one our acquistions dept. staff.