I Truly Need You Guys On This One!
I just received a call from my ad. The option amount I wanted is 10k-12k with a monthly of 2200. The guy wants a lower payment and is willing to give me 40k down. OH MY GOD!!!. I'm feeling so nervous. Of course I don't want to screw myself in any way so thats why I'm bringing it to you guys. How would you guys handle this? How much would you lower the monthly with that much down? My mortgage on the house is 1800. Is there a way to do this where everyone wins and most importantly, I get that 40k? I just spoke to him and he's waiting on a call back from me with how much I can work with the monthly.
Help guys!!
quinn
p.s I guess I'm nervous because I've been reading so much and now it's actually real. I'm so excited.
quinn,
Yes and it's easy, but without any numbers on the deal it would be hard to explain on how much of the $40K you could put in your pocket.
John $Cash$ Locke.
[addsig]
Thanks John for responding, here's how it all started
I purchased the property for 225,000 in a market where houses are selling between 270-278k.
My note is 1800.00
I put an ad in the paper for 2200.00 per month.
I got the call,so I called the guy back and told him the down is 10k min with 2200.00 per month. He wanted to know if he gave me 40k how much I could bring the monthly down. I just spoke to him again to see where he would like the payments and he's wanting me to just give him an amount. I also asked if he had credit issues as to why he couldn't buy outright, he said no. I told him if we did a short term CFD I would lower the purchase price, which by the way is 282K. He said then he would have to deal with high interest rates.
I of course want to sell but I don't want to be a motivated seller. Everything I presented to him he was like, I don't know. I'll be at the house tomorrow cleaning up, I told him to come and look at it. He was like, we'll talk more about terms then. I don't plan on calling him back, if he's interested he'll come tomorrow. I do however want to be prepared if he comes. One of his comments was that he would be paying most out of pocket. I took that to mean because he was giving 40k and if we did a short term LC. I had asked him how long he was considering being in a LC and he couldn't give me a definitive answer. I think he would want to do it for years which wouldn't benefit me at all especially if he's concerned about interest rates.
How would you handle this situation
Thanks John and everyone else that replies
quinn
Yes, it would benefit you to do it for years. You are making most of your profit up front. Take 40k, lower the payments to say $1900/month to cashflow $100/month and sit on it as long as he wants. If he defaults ever, oh well, you can pocket the $40k. If he does it forever, you cash flow that money forever. OR the other option would be tell him you will do a breakeven cashflow of $1800/month but you want a higher purchase price. Example he wants a 5 yr option, OK but purchase price is now going to be $315k because of inflation in that time, etc. If he wants you to take a hit on cashflow a month, it might even be worth it if you tell him you want a bigger purchase price. Taking that extra $30k today would help because you could put that money towards other investments, even if you are at a negative cash flow. think of it as a $30k "interest only" loan, lol.
Quote:
On 2004-11-13 15:30, quinn wrote:
Thanks John for responding, here's how it all started
I purchased the property for 225,000 in a market where houses are selling between 270-278k.
My note is 1800.00
I put an ad in the paper for 2200.00 per month.
I got the call,so I called the guy back and told him the down is 10k min with 2200.00 per month. He wanted to know if he gave me 40k how much I could bring the monthly down. I just spoke to him again to see where he would like the payments and he's wanting me to just give him an amount. I also asked if he had credit issues as to why he couldn't buy outright, he said no. I told him if we did a short term CFD I would lower the purchase price, which by the way is 282K. He said then he would have to deal with high interest rates.
I of course want to sell but I don't want to be a motivated seller. Everything I presented to him he was like, I don't know. I'll be at the house tomorrow cleaning up, I told him to come and look at it. He was like, we'll talk more about terms then. I don't plan on calling him back, if he's interested he'll come tomorrow. I do however want to be prepared if he comes. One of his comments was that he would be paying most out of pocket. I took that to mean because he was giving 40k and if we did a short term LC. I had asked him how long he was considering being in a LC and he couldn't give me a definitive answer. I think he would want to do it for years which wouldn't benefit me at all especially if he's concerned about interest rates.
How would you handle this situation
Thanks John and everyone else that replies
quinn
Ok, I didn't think of it like that. The longer I actually hold it, the less is owed on my mortgage because he's paying it and if he defaults he's out and I get to start over with a new down payment, higher purchase price, less on my mortgage and then positive cash flow because at that time if need be I could refi to lower my payments. Good deal!!
thanks, its hard to actually think straight when it's right in your face.
quinn
Maybe I'm just a bit more cautious then others, but from what you're saying so far, those little flashing caution lights in my head would be shining all in my vision range with this guy.
He supposedly has $40K to put down, no credit issues, yet doesn't want to buy outright AND can't give you any solid answers as to what he does want to do. I don't know what is deal is, but I would tread very carefully around him.
Now to your question. Using the figures you supplied, if you're selling for $280K and someone puts down $40K, then the monthly payment would be about $1930 per month at 9% for 30 year term. Whether you do a CFD or a lease option, I would still use 9% interest as a guide, then you can bump it up or down as you see fit.
BTW, $10K down on the same $280K would be $2175 per month at 9%. Just a guide so you can see where I'm coming from with this.
Roger
Thanks Roger and you are absolutely right about the red flags going off, thats why I said I would not be calling him again. When talking to him, I was suspicious about his intent and asked him who he was buying for and things like that, and when he wouldn't and couldn't give me definitive answers my momentum waned. The whole conversation I had with him was just off. When he first called and left a message he stated he was interested in the Riverview apartments, my message makes reference to my Riverview property. It was just weird. He probably won't call back, and actually I won't be too upset if he doesn't.
Thanks for you advise on the payments too.
quinn
Just have the guy fill out an application. Pull credit if you want, do a background search, verify employment, etc, etc.
Whatever to make your comfortable. Don't stress the first step is certainly the application.
GOOD LUCK