Want to buy...!? - Posted by Chip


#1

Posted by Bill Gatten on March 04, 1999 at 18:59:33:

Chip,

First of all, don’t get caught up in sellers’ pipe dreams. Their expectations are seldom real. The lady just needs a knowledgeable investor like yourself to comfort her in her time of need.

Look at it this way: If the property is really worth $140,000, you know she’d accept $135,000 or less (probably a lot less); and by the time she’s paid all the Costs of Sale (commissions, closing closts, etc.), she’ll end up with $120-125,000 at best. Then she’ll pay off the loan and walk away with $15-25,000 (if she’s lucky)…with income tax of $10,000 or so due on that: netting out maybe $5,000 to 15,000 after tax, in lieu of the $40K she’s salivating over.

Wouldn’t she better off to refi for 85% of the $140,000 ($119,000); pay off the first, let you take over the payments on the new loan; then carry the remaining equity for you at, say 8-10% interest-only for a couple years? You might even show her how to discount her 2nd at 50% (or so), so she could end up with maybe $30,000 over all, instead of the $15,000 she’ll have otherwise.

Then if the good lady has any trepidation about DOS violation, turning the title over to you, your financial wherewithall, etc… there are ways around that too.

If she still balks… whack her with a wooden mallet, and get on to your next deal.

Hope this helps.

Bill


#2

Want to buy…!? - Posted by Chip

Posted by Chip on March 01, 1999 at 12:17:19:

Newbie here. I’ll try to make this as short as possible. A friend of ours is selling her house (FSBO). The house was appraised 4 years ago for 140k, she owes 100k on it, and wants 40k in cash (which I have none of). On the property with the house is a 1 bedroom rental that gets 400 per month (kind of like a guest house that they rent out to college students), this is included with the main house. I’m renting now, and would love to buy this house, but like I said, I have no cash, and will be separating from the military in 30 days, with no job currently lined up, so I dont think I can get conventional financing. I asked her if she would be interested in a lease option, but like I said she want 40k in cash.

Is it reasonable to think I might be able to buy this house with creative financing, without knowing anything about CREI, or should I just forget about it altogether?

I’ve ordered 2 courses in REI, but they wont be in until next week or so.

Thank you for any comments or suggestions.

Chip