Contract For Deed In NC/ Can Client Sell?
Client just bought a property for $56K and was able to pull some cash out. Property is currently occupied with tenant who signed a contract for deed with previous owner. Sales amount on contract for deed is also $56K (12% interest rate/30 years). House was last appraised at $83,500.00 a few months ago.
Since the current equity is already maxed out (as per contract for deed which is being honored), can this client sell this note to someone who is willing to wait out the term?
Bottom line, he wants to get this out of his name. What would be the best exit strategy? Thanks.
Why did he buy this house if there's no money in it?
Yes, he could sell the Land Contract but the odds of getting more than his $56,000 are pretty slim.
Assuming he has an underlying mortgage then selling the LC wouldn't get the underlying mortgage out of his name.
He can pick up a couple hundred a month spread on the LC. which is not a horrible idea-- he can always hope the LC buyer defaults or looses patience and cashes him out.
Or he could encourage the LC buyer to refinance and cash him out now. LC buyers payment goes down a couple hundred a month (more if he refi's on an ARM) your guy might even buy down the rate for a year or two LC buyer is only trying to refinance at a 67% LTV, even with relatively poor credit he should be able to find somebody to do that. If the LC buyer's credit is good he could even put some money in his pocket at the close--- that might be a motivation.
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Thanks for the reply. He was able to get some money at closing so he is content with that. He mostly does rehabs so the idea of "holding" property doesn't appeal to him too much. After thinking about it, he just wants "out".