Receiving Profit on Back End ????? - Posted by Goodie

Posted by JohnBoy on March 09, 2001 at 09:07:24:

You can write up the deal with you as the seller carrying back a second mortgage, no interest, no payments, for x number of months, with the balance due in full. Since their is really no way of knowing exactly how long it will take for your buyer to get the thing sold I would negotiate on a set time limit for x number of months, then if he needed more time he would have to at least start paying interest only at a certain percentage until he got it sold. This way he doesn’t just take his sweet time getting it fixed up and selling it while tying up my money I’m carrying for him!

Say you want $35k. He says he can pay $16,500 now and the balance after he fixes it and gets it sold. No problem. Write it up for $16,500 payable at closing, with $18,500 due and payable in 6 months, no interest, no payments and no pre-pay penality. After 6 months in the event the buyer hasn’t sold the property and can’t pay the balance due, seller agrees to except interest only payments, payable at 10% interest annually on a monthly basis. Or whatever terms you can agree on. You secure your interest with a second mortgage which would have to be paid off at the time of closing when he sells the property!

BTW, make sure you get a sizable NON-REFUNDABLE deposit put up front, subject to the buyer getting clear title. This way he can’t just stall this thing and back out at the last minute and try to go around you and deal with the seller directly once your contract expiries! ALWAYS get a chunk up front so the buyer will close. If he’s serious about buying it then that shouldn’t be a problem!

Receiving Profit on Back End ??? - Posted by Goodie

Posted by Goodie on March 09, 2001 at 08:40:11:

I have a deal that’ I m trying to work out with an investor in which he will be getting the “lion’s share” of the profit when the home sells. My question is I’m flipping it to him for a $35,000 fee initially and he responded to me below:

“I was thinking of a much lower figure, more in the $10-$15K range. My bank won’t go above 75% LTV. Even if I can get it appraised for $400K post-repairs,that would enable me to borrow $300K - of which $175K would go to repairs (I
would need to spend that much in rehab to get the $400K appraisal), leaving $125K to pay for the property. $125K minus the $108,500 for the heirs is $16,500 - that is the absolute MAXIMUM I could give you unless you are willing
to defer some of the compensation until the deal is complete.”

How can I structure the deal so that I’m protected if I choose to accept his offer of $16,500 at closing and the balance when he repairs and eventually sells it, or should I stick to my guns of the ENTIRE fee being paid at closing when I flip it to him ?


Re: Receiving Profit on Back End ??? - Posted by Nate

Posted by Nate on March 09, 2001 at 13:55:18:


Why don’t you negotiate with me, instead of asking for help on the board?
I have some ideas. Send me an email.