Please Help - Seller Financed Note
We own our condo free & clear, appraised last month for 100k, title search completed & clear also. We want to create a seller-financed note for about 30k which expect to pay off within 18 months. We want to get money generating in order to be able to purchase notes of our own as well as begin flipping. Can anyone tell me if this is feasible? Thanks a lot!
Mel
Hi Mel , first tell me if you have just sold your condo or are you living in it. From my experience I believe you have to have sold your condo as a seller finance mortgage to someone and then if you need money you can then try to get a note buyer to buy part of your note or all of it. The note buyer will give you a quote for your property and for what you are asking . The note buyer becomes the mortgage holder until his money is paid back by your buyer. Then the mortgage will revert back to you. I will ask my contact to see if your situation is doable
Hey! Thanks for your reply. I am living in the condo now and plan to remain in it. My fiancee lives with me and I was thinking about selling to him on a seller-financed note for this. We just weren't sure about legalities and how doable this option might be. The goal is getting some cash out of the house without having to go with a traditional equity loan etc etc. I appreciate your help!
Mel -> I don't mean to be insensitive... And, I wouldn't be one to Stop "True Love" and all of that... But, REALLY?? You need to ask yourself, IS THIS THE GUY I WANT TO MARRY?? Sorry... But, THIS COULD GO WRONG in SOOOOO many ways!
I've seen it! Not experienced! (thank the Lord) And, it's NOT pretty...
GOOD LUCK!!
[addsig]
What are your credit scores like? If above par, you might want to consider a Home Equity Line Of Credit or HLOC. You can get a HLOC and just make interest only payments. I have a 30k on my home and a few times I maxed it out and the monthly payment was only 120 dollars+/-. Just a thought!!
Good Luck,
Matt
Matt is right, I would go secured HELOC.
Unfortunately, neither one of us has very good credit. That is part of the drive to get involved in note flipping/rei in the first place and why we ordered the program! So a HELOC is not really an option.
Was thinking about it (and, probably ignorant questions)... But, better to know now, than Later!
Depending on the length of time, etc.. What about Common Law Marriage? (Just looked and FL does NOT currently have a common law marriage! "UNLESS, common law married in another state". But, figured for others with similar concern, this may play into it..)
(assuming the worst) Is it possible for HIM to sue later for PARTIAL RENT, as you too resided in the home that you sold (effectively, rent free)?
Three amazing letters that work!
C. Y. A.
And, just curious... Have you gotten all 3 Credit Reports yet??? Do you know what items (for sure) are on there that prevent you from being successful???
Don't wait! Start now...
Ok. Assuming the worst and things don't work out between us... is there any way to create a note on my home that is done through a note network rather than conventional bank mortgages etc. and would there be a buyer interested in buying it? I have 100k value in the home and am only looking for about 30k to get us rolling and get some bills consolidated. As I said, my credit is nowhere near perfect - had a finance deal set up with a large corp that got denied at the last minute last week (after 6 weeks of jumping through every hoop they produced!) We really need to get some of the equity out of the home.
I really appreciate everyone's input!! Thank you for all your help so far.
Have you considered taking a loan out at your Bank (assuming you've used the same bank for a few years) and using the house as collateral? I think this ties up your property though...
Answer to your question is yes and no. You can sell to your boyfriend w/ owner financing but it would have to be around fmv. If you seller finance for only 30k, you will run into problems w/ the IRS because basically your selling a 100k prop for only 30k. You would not be able to seller finance for only a portion of the prop because, well, you can't just sell half the house and keep the other half.
Also, if you are getting into note buying, then you should be aware that note buyers only pay a certain % for the note, they do not pay face value. Remember note buyers are in it for the money also.
Example: Lets say you seller finance to your boyfriend for 80k. At best, you will be able to sell the note for 80% of face value, so you would get only 64k for the note. Right of the bat you just lost 16k because your boyfriend would have to pay back the entire 80k to the note buyer.
Also, if you do decide to seller finance and sell the note, you do have to be aware that now you would no longer have claims to the property. The title would be under your boyfriends name and the note now belongs to the note buyer. You might not think it will ever happen, but if you and yours truly would happen to break up, then you just lost a 100k property. I would not recommend this route, not worth the risk.
You say your credit is bad, but even so, you should be able to get 30k easily w/ conventional financing because of all the equity you have. If you need more info w/ this, PM me and I will give you all the info you need.
As you've been advised, these "boyfriend" deals often go sour, so I'd advise a lot of caution before selling to him and just taking his note.
You'll find that it's a rare, and inexperienced note buyer who'll want a note from a poor credit risk. Meaning you're not going to get a cash offer for nearly the value of what you're selling.
You can test this by going ahead and putting a hypothetical note online and seeing what offers you get for it. Just put in all the facts, re his credit, fact it's for a half interest if that's what you're selling, the value info re the RE, his monthly payments, the interest rate, everything a note buyer will want to know.
This way, you can tell in advance what market, if any, might exist for this note...before you're committed.
Thanks John - great advice.
Thank you everyone for respnoding but I did end up going with an equity loan anyway. Should be closing in two more weeks. No fiancee risk that way