Two possible deals- opinions? - Posted by Charity

Posted by Jim IL on December 10, 2000 at 20:03:28:

I won’t address your first scenario, because high end homes are not my specialty.
But, with the second one, why not do it “Subject to”?
You can take the home “subject to” the existing financing, both loans.
But, still have the seller pay you for the second loan, for a period of time you negotiate.
Write a note for the amount they will pay and for how long.
If the sellers has any other assets, use them to secure the note.
If not, think about the note anyway, even though it will be unsecured, you will have documentation to go after them if they do not pay.
This way you own the home, get all the tax advantages of ownership, and can sell it however you wish.

IF the seller will not go for this, then just do the L/O, as you said, but record a performance mortgage so the seller is obligated to make the payments on the 2nd.

Jim IL

Two possible deals- opinions? - Posted by Charity

Posted by Charity on December 10, 2000 at 10:25:33:

I have two possible first deals and would like opinions on different structuring ideas…

The first one is a free and clear owned luxury condo. FMV about $550K minimum and possibly upwards of $600K. The owner lives out of state and is interested in letting me do a straight option to see if I can find a buyer. He is asking $509,000, but I feel sure I can get him down into the $400s. I also feel good about selling it. I considered owner financing, but I am certain he would want a large downpayment and seems to want to be cashed out since L/O was not of interest to him. Any other ideas?

The second one is a desperate seller. She has a 3 year old home worth about $145K. She owes $119 on the 1st and $30K on a second. She wants someone to L/O the home, pay the payment on the 1st and she will continue paying the second. My idea was to L/O this one for about $159K, make a monthly spread and option money on the front. My concern lies with the 2nd mortgage. What is she gets behind or doesn’t pay? How does it work when someone is willing to pay the 2nd? Any other ideas on this one? Would subject to be better?

Thanks in advance! I am learning a lot this week and feel like I am finally making progress and jumping out there! (well, as far as a pregnant woman can “jump” anyway!)