Posted by christopher w on July 14, 2009 at 10:46:37:
You have not stated what the value of the property is. However unless the property is worth at least $175,000 it will be nearly impossible for you to get the property refinanced as your maximum LTV will be capped at 80% plus you will need some equity for closing costs.
The deal the seller is offering you is not bad. The down payment is only 3.7% of the purchase price, and the $1300 amount amounts to a little bit less than a 12% interest rate which is better than you will get from most HML’s. As I said above if the property value is where it needs to be to get the refinance done then this sounds like a decent deal.
I would also suggest you speak with a broker/banker that handles these types of deals because you may run into issues with the end financing if your seller does not own the property outright. If they have a wrap or subject 2 mortgage you will definitely have problems getting a refinance done.
I am trying to buy my first property, it is a duplex that needs a little bit of work. Some sheetrock and electrical, thats it, about 5k of work. Help me restructure the following deal a little bit so its more in my favor, I am not versed enough in creative financing.
Purchase price: $135,000
Bond for deed type purchase.
Seller holds title for 3 months, I pay them $1300 per month.
At the end of 3 months, I will have fixed the property and rented it. So I refinance, get a conventional loan and pay seller back in full
However, they want 5k down at the start which is reduced from the purchase price at the 2nd closing. I DO NOT want to pay that, I would rather save it for repairs and extra costs. However, they state that is what they need the most in the deal to pay off expenses relating to the property.
Also, that $1300 per month is basically like rent, it does not go towards my principal with the seller. It resembles more of a lease purchase I presume.
So they need the 5k, I dont want to give it to them. How can I redo this a little bit so there is less money down? And keep the numbers essentially the same?
Extra info: rents at about $2200 per month total. Seller is highly motivated.