Posted by Reif on March 28, 1999 at 24:40:38:
OK, I understand why you created the note for the time/money in the pocket angle.
Now will you go back and refinance your 13% down to 8 or 9%?
Seems like that would work like thought - just in reverse.
I guess it would be 78% Loan/purchase price (39K/50K).
Does that make sense?
Or am I still in ‘the box?’
Thanks,
Reif
Why I love this board - Posted by The Baze
Posted by The Baze on March 26, 1999 at 19:20:40:
On Monday I played hooky from work. Since I’m not actively looking for houses right now, I don’t have an ad running, so I called on a few. I found a lady with a house for sale in an older area of town. She indicated that she was pretty motivated to get rid of it. So I go take a look. It’s vacant, and despite being a former rental (tired landlord, hence the motivation) it’s in pretty good shape, and worth about $60,000 to $65,000.
So, I remember an article by Alex Gurevich, and I offer her $32,000 now, with another $18,000 due in 3 years, no interest or payments until then. She thinks about it for an hour or so & calls me back & says she’ll take it. So we get the contract signed and I get ready to call my mortgage broker looking for some fast cash. (I told her we’d close in 10 days) Then I remember JP’s article about crearing your own mortgage, and Terry covered that in depth at the St. Louis convention, so I get out the manual from that convention, go over it, and pop one out.
The numbers: $39,000 purchase money mortgage (60% LTV), interest only payments of $422.50 for 3 years. The investor will only have to fund 36,465 (6 months seasoning). EXACTLY like JP & Terry said to do it. Now I call my mortgage broker with this mortgage for sale.
I got my response Wednesday. We have an investor who will buy the mortgage. I will pocket, give or take a bit, $3000 at close (darn closing costs). I will sell this house on a L/O, $68,000 w/ $2,000 down, payments of $678.88. That’s $5,000 profit up front, $250/mo cash flow and a few bucks on the back end. Not a bad day off, wouldn’t you say?
Tom Bazley
Re: Why I love this board - Posted by Reif
Posted by Reif on March 27, 1999 at 11:03:17:
OK, I understand that it is a good deal like it is, but why do you create the mortgage at 13%?
Seems to me if you go to your mortgage broker and get an 8% loan at 39K (so you can put some $ in your pocket) you would have a monthly payment of $286 and way better cash flow during the time of the L/O.
What did I miss?
Reif
Congratulations! - Posted by J.P. Vaughan
Posted by J.P. Vaughan on March 26, 1999 at 20:28:14:
Nice deal, Tom! But I thought you can’t do that where
you live 
JP
Re: Why I love this board - Posted by The Baze
Posted by The Baze on March 27, 1999 at 17:41:07:
I don’t know of a conventional lender that would allow me to buy the house and put money in my pocket. They loan based on the appraised value OR the purchase price, so I would’ve had to come up w/ some of my own funds. Not gonna happen. Not only that, I would’ve had to jump through some hoops and the process would’ve taken about 30 days. I think what sold this lady was the fact that I could close this thing in 10 days.
Tom Bazley
Re: Congratulations! - Posted by The Baze
Posted by The Baze on March 27, 1999 at 17:36:14:
You can’t. But I didn’t know that, so I did it anyway.
Tom Bazley