What To Do When Seller Owns Free&Clear?
hey fellow investor peeps
well i had a lady call me about a letter i sent to her. She is a Non-occupant owner and owns the house free&clear.
i wanted to know what options do i have with this... the tax appraisal came in at 144k and she wont accept anything below 143k... (which i'm sure i can talk her down to 140k) but the point is, she owns the house free&clear...
i guess my question is, What options do i have that you would take??? i was thinking about maybe discussing a purchase option with her, cuz she says shes in no hurry to sell, so i take it that she can wait for her money. and jus turn around and L/O the darn thing for what ever price i want cuz its free and clear (by price i mean down&monthly) while paying her interest only payments of $###...
but are there any other options??? thank you for your replies.
[addsig]
1) tax appraisals and market appraisals can be, and frequently are, two different things.
2) this doesn't strike me as a motivated seller situation.
I would consider putting this on the back burner with a follow-up, maybe, in several months if the property hasn't moved.
well the comps in the area are from 140k and up, located in a mid upper neighborhood with other houses ranging close to 200k. our tax appraisals have come in very close to market appraisals, but yes you are right, they are two different things. i know the area pretty well and 143k for this house is right at fmv.
[addsig]
if the asking price is the same a fmv then what is the question????
these no equity deals that everyone talks about doesnt seem worth the while to me. having to rely on appreceation or a rent to cover the mortgage seems to risky to me.
each to there own but, as a newbie, i want cash proceeds to pay cash for the fmv deals in a good area so the rent is 98% in my pocket. no worries that way. how would you like your only obligation to be the property taxes and insurance!!?
[addsig]
it sounds to me that people are confusing equity with appraisals, assessments and fmv. she has all the equity if she owns it free and clear. the problem is her flexibility and her asking price - this is where you want the flexibility. since she's not in a hurry to sell and wants FMV, there is no deal here.
hrm... so it sounds like it all depends on how she is with her terms then right Jackman???
and yes, being that she does own it free & clear, she has all the equity, so no mortgage payment was my understanding. She would act as my bank if i should decide to move forward on this and purchase it with an option and then L/O out... i guess it jus really depends on how flexible she is with terms... i see thank you jackman, you've been a big help.
[addsig]
Sounds like if this is a deal to be done, terms are the way to make your money!
Get her to finance the sale at a low interest rate then sell it to somebody else with you carrying the paper at a higher interest rate. Voila! Cashflow!
Or, my preferred route: Lease Option it with $1000 down for three years at 600/month and option it to somebody else for $5000 down and 900/month.
-Rup
How about full price zero interest or market interest, reverse amortized or any number of payout options. Substitution of collateral ect. ect.[ Edited by rickomarsh on Date 12/17/2003 ]
I'd shoot for a 100% financed, 0% interest purchase. Tell her:
"I'll pay you $______ per month for ____ # of months for a total of $145K.
(slap on a couple extra and she may go for it quickly)
In the real estate market prior to the last crash of the late 80's early 90's. I did a rather interesting transaction on the typical West Los Angeles larger house.
It was large, and blatant bad taste. The colors were wrong, fake spanish. The maids quarters so small and stark you would have had to hire an Amish girl and skiny.
The owners were leaving the country by request, they did something naughty. So I bought it at top market just to get them on their way. They had taken back a Trust Deed in the full amount of purchase. 5% interest 40 years. Now don't laugh it does happen. I sold the house with also a nothing down. To a nice, wannabe producer with a slight skill in comedy. I marked it up cause it was nothing down a few bucks and did a wraparound Trust Deed slightly larger payment 7.5% interest (a reflection on his standup ability) amortized over 25 years. I had held the title open and the title insurance policy, I did the Escrow myself. (you know baseball hat one way towards the front and as an escrow I turned it sideways.)
Well I got the shock of my life, the wannabe was smart. Hired a good designer who with lots of paint and a little spit made it attractive, elegant and oh my god liveable.
The wraparound stayed on for ten years, payed my tips at the Friars Club and the YMCA. I loved it.
Cheers Lucius
Quote:
On 2003-12-17 17:41, Lufos wrote:
In the real estate market prior to the last crash of the late 80's early 90's. I did a rather interesting transaction on the typical West Los Angeles larger house.
It was large, and blatant bad taste. The colors were wrong, fake spanish. The maids quarters so small and stark you would have had to hire an Amish girl and skiny.
The owners were leaving the country by request, they did something naughty. So I bought it at top market just to get them on their way. They had taken back a Trust Deed in the full amount of purchase. 5% interest 40 years. Now don't laugh it does happen. I sold the house with also a nothing down. To a nice, wannabe producer with a slight skill in comedy. I marked it up cause it was nothing down a few bucks and did a wraparound Trust Deed slightly larger payment 7.5% interest (a reflection on his standup ability) amortized over 25 years. I had held the title open and the title insurance policy, I did the Escrow myself. (you know baseball hat one way towards the front and as an escrow I turned it sideways.)
Well I got the shock of my life, the wannabe was smart. Hired a good designer who with lots of paint and a little spit made it attractive, elegant and oh my god liveable.
The wraparound stayed on for ten years, payed my tips at the Friars Club and the YMCA. I loved it.
Cheers Lucius
my bad lufos
but can you or someone translate? or so the moral of the story is???
[addsig]
ahabion, u got it! it's all in the terms.
everyone has been giving good ideas, but it's up to you what you consider a deal. personally i'd rather wait 2 months for a clearcut 20k deal (in which i'm in control of the property), than involved myself in all this hassle for a couple hundred sugar smacks a month and a potential headache. when you lease option, dont forget, you don't have the deed - anything fishy can happen.
before i get dirty looks, i'm not knocking L/O at all - about 90% of you on here probably know more about this whole arena than i do - i just prefer it as an exit strategy, not for a purchase.
Don't have any new ideas myself, but I love the L/O and the wraparound ideas the best. No work involved except cashing the monthly check!
[ Edited by omega1 on Date 12/18/2003 ]
ahabion,
What you can also do is buy 2nd on discount from K-Mart, reinsteit the first aproaching form the back door in 3rd gear and forclose tha same day on Ms. homeowner when you bring first to a current stat. But do not rehab if you planig to flip because she did it just las month because she know you'll send her a letter.
Anyways, if you are planing to remind me that she owe it free and clear, then why did you send her a (foreclosure?) letter to begin with? Jocke aside, just wright her a check for $140K and be the MAN!
When you got the title, let me know and I'll take it off your hands for ... that we'll have to see. How about $136K O down and 0% interest until I decide to pay you? And I am sure any one here would take it off my hands for the same term. Would you guys?
ahabion,
What you can also do is buy 2nd on discount from K-Mart, reinsteit the first aproaching form the back door in 3rd gear and forclose tha same day on Ms. homeowner when you bring first to a current stat. But do not rehab if you planig to flip because she did it just las month because she know you'll send her a letter.
Anyways, if you are planing to remind me that she owe it free and clear, then why did you send her a (foreclosure?) letter to begin with? Jocke aside, just wright her a check for $140K and be the MAN!
When you got the title, let me know and I'll take it off your hands for ... that we'll have to see. How about $136K O down and 0% interest until I decide to pay you? And I am sure any one here would take it off my hands for the same term. Would you guys?
Omega1
Er? who said anything about a foreclosure letter? or foreclosure for that matter.
"I DEMAND A RE-READ!!!" says Bush.
[addsig]