Suggestions on how to set up this deal - Posted by Chan Lipscomb


#1

Posted by John Katitus on December 07, 1998 at 01:42:31:

Your financing knowledge far exceeds mine. I hope you have the patience for a couple questions.

If you wrapped it, would you buy subject to the existing mortgages and owner finance for a higher total? How would you accomplish the purchase - Land Trust, Land Contract,etc.?

If you purchased with an 80K note, where would the note and 80K come from? Same question if you did a new second?

Thanks for your input, Bud. I have learned a lot from your posts.


#2

Suggestions on how to set up this deal - Posted by Chan Lipscomb

Posted by Chan Lipscomb on December 03, 1998 at 16:07:39:

I am looking at a nice house in a nice neighborhood. Appraised at $100K, has been on the market for 5 months at $94.5K and a $1.5K carpet allowance, no bite (says a lot for that appraisal, doesn’t it?). House is vacant, owner is 5 hours away, struggling to keep the payments current. The house will rent for $700, needs about $2K work. Has a VA 9.5% loan with PI of $552, balance of $60K, and a second of $13 with payments of $250. Total payment once TI is added in is $900. Listing is almost out. Seller really wants to move. I usually buy deals with a little more room than this…would some of you old pros take this on, and if so, how would you structure the deal?

Thanks

Chan


#3

Re: Suggestions on how to set up this deal - Posted by Bill Gatten

Posted by Bill Gatten on December 07, 1998 at 23:37:04:

Chan,

I’ve written several post on 3rd Party Land Trust conveyance today. This might be what you’re looking for, rather than boring everyone, may I suggest you look of some of those previous posts from today by m’self.

Best of luck,

Bill


#4

Re: Suggestions on how to set up this deal - Posted by Reif

Posted by Reif on December 03, 1998 at 22:04:48:

I’m a new guy, but it seems to me a key question is what REALLY is FMV? We know it’s less than 94.5K as is.

If you take over the payments, fix it, what is the best you could do with it, either rent or sell?

Or is this not the approach to take?

Reif


#5

Re: Suggestions on how to set up this deal - Posted by Bud Branstetter

Posted by Bud Branstetter on December 03, 1998 at 16:26:26:

What we don’t know is what immediate cash the owner needs. Depending on that is whether I straight option, Lease/option, or buy with a note deal. It does have the earmarks of motivation. My guess is that you can talk him into a L/O if you can get him cash in a year or so. Make sure there is at leat 10K profit for yourself.


#6

Re: Suggestions on how to set up this deal - Posted by John Katitus

Posted by John Katitus on December 04, 1998 at 01:32:03:

If he needed no or only a little cash, how would you structure a “note deal”?


#7

Re: Suggestions on how to set up this deal - Posted by Bud Branstetter

Posted by Bud Branstetter on December 04, 1998 at 15:13:23:

I would take it that the appraiser was competent and that the appeal of the house was why it did not sell. Of course it could have been a realtor that did no marketing and was asking all cash with a new loan. If the people will give me the deed, great. Wrap it and resell as owner financed. If they need some money, I can purchase with a note for 80% or 80K and get the difference (80-60-13) back. I could even do a new second note and reduce the payments. The rent for $700 seems a little lite for a 100K house. What is bad is the financing(short term 2nd at 2%/mo of amount). On the sale, with option consideration, I should be able to do or repay myself for the fix up. If I had lease optioned from the sellers because they wanted more cash than I was willing to give them up front I would also have an agreement (maybe part of the performance mortgage) that protected my fix up costs.

I am guessing that I could not talk them into selling for less than 85K.(Some of these silver tongued devils probably could) Then I would approach it as a L/O and ask them to chip in on the payments until I can get it refi?d with the tenant/buyer. Depending on the down payment a buyer has and his credit I could combine it with the 80% note and owner finance while carring a ~15K 2nd for a number of years.