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?