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.
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?
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.
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.
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.