Posted by Glenn OH on February 28, 2000 at 08:49:48:
Consider a PACTrust. They must have some money for a down payment, which could be use to get some cash out now, and to set-up the trust and escrow account. You could depreciate the property while in the trust (shelter some income), resident will get the interest and tax deductions - so you can charge higher rent for better cash flow. The risks associated with renters or options are almost completely eliminated. Win/Win/Win for you, buyer, and mother-in-law.
When my wife left her first husband, she bought a house but in her mother’s name so it wouldn’t be questioned in the divorce settlement. Her mother paid about $10,000 out of her pocket and we make the mortgage payments. The cost of the house to my wife was $47,000. We have someone interested in it . We told them the least we could take was $59,000. They want it really bad, but were denied a loan by a bank. I was hoping to just do a simultaneous closing but now they want to know if we can finance for one year then they’ll pay it off. I have several houses and read everything that I can get my hands on concerning real estate and deals, but whenever I try to think of something creative my brain just shuts down. I want our money, my mother-in-law wants her money and the people want the house. I’m going to suggest that they check with a mortgage company or another bank until one says yes, but in case they can’t get approved does anyone have any advice?
Greg:
With buyers who have difficulty qualifying one should consider the benefits of owner financing. You have ready and willing buyers who simply need some assistance to get into this home. You can provide that to them with a properly structured owner financed mortgage and note. You can then sell the note and convert it to cash.
As was suggested you can also refer them to a mortgage broker. If you are willing to carry some of the money you enhance your ability to sell to them. To pin down what can be done their finacial situation would need to be evaluated. If they can get a new loan in a year they must be close. Whether it is just more down payment or time on the job can be overcome. You can even do the same thing by selling the owner financed note. Minimum is that you could sell a 80% $47000 note for near par value. More likely you could sell a 90% note plus get their down payment.
You have to have near spotless credit to get a loan from a bank. If one turned them down chances are they all will. Tell them to contact a local mortgage broker. They deal with many lenders for almost any situation. Before they go their let them know that they need to obtain at least a 90% loan with 100%CLTV. In this situation assuming they recieve a 90% 1st mortgage. You would be taking back a seller 2nd mortgage for the difference. (I would sale the home at max. value in this situation) At closing you would recieve the difference from $54,000 minus the balance owed on the home (using $60,000 as the sales price). In addition you would recieve a monthly payment on the balance at any interest rate you desire and for any length of time (you shoud never go over 10 years, however with a small balance I would set it up for 5 years). This is only one scenario. Their are many ways of creative financing.