What Do You Think About This Deal??? - Posted by B.L. Renfrow
Posted by B.L. Renfrow on May 29, 1999 at 20:13:19:
My previous deals have all been assignments, so am I missing anything here?
SF home, FMV/comps around $35k
Seller currently owes $32,800 on a 30 year note from the previous seller with a balloon due in 4 years. Monthly PITI around $330. He is current. Will sell for $27,500 and cover the difference from his savings.
His motivation: He works 20 miles away and has committed to rent a house in the town where he works beginning July 1.
Essentially no repairs needed, just new front steps and some brush removed from yard.
Market rent $450-550. Market is fairly slow here. I’m sure I could rent it in no time, but buyers are very picky right now.
My offers, which he is presently considering:
L/O 3 year term, no option consideration, rent equal to his PITI, purchase price $27,500. I would then look for a T/B or cash buyer.
Take title “subject to” his mortgage. That would then give me 4 years to find a buyer, during which I could rent if unable to find a buyer immediately.
Cash offer of $25,000 plus closing costs with 90-120 day close. I would then offer seller financing and hopefully sell at FMV and find a buyer who would qualify for at least an 80% first and I would carry a second for the balance.
My credit situation precludes my obtaining conventional financing for this property, and the seller does not wish to refinance. Hard money does not appear to be an option here, since it would be well over 65% FMV. However, the spread of $7500 between sale price and FMV appears to make this a viable deal, especially if I can L/O somewhat above FMV. Plus, there’s a decent spread between PITI and market rents.
So, have I overlooked any better possibilities here? And, given the circumstances, which do you all see as the “better” offer of my 3 above?
Thanks, as always, for your input.