John, William, Do They Make Next Months Payment?
So, I've been reading the post a lot lately and I keep seeing stuff like "when I buy the house the seller makes the next month or couple of month payments" so that you can find a buyer. Is this common practice?
Specifically, John and William, do you guys do this and is this a good idea?
Thanks,
Mitchell
I have done it on a few occasions. My experience is that most of those who I have delt with are so tap city it would be impossible. Most have missed payments or got hit with an exploder. Note came due, tax bill, federal lien etc. etc.
In an occasion where the future profit was large and I wished to include the present property owner, I had him make two payments as his contribution toward obtaining a half interest in a future profit.
I set up the five pay plan for taxes and made two back due mortgage payments and worked out a plan to hold off the foreclosure sale while I raised the rest of the money to bring the note current.
I also put another new roof on the house and redid the roof gutters as they were in full failure, rotted thru, nobody had ever cleaned them out. We also unclogged attic air breathers so that a nice air movement was obtained. I also evicted a small colony of field mice that had moved in and did not respond to proper notice. It all worked out. We sold the house and the ex owner moved back to France. What a party, he almost missed the plane
Fun and games. Lucius
kingmonkey,
Have I done it that way yes, is it the norm no. This will come up in the negotiation process with the seller as to whether they can make some future payments.
To tell the truth even if they said they could, I wouldn't bet the family farm on it.
As Lucius pointed out "Tap City", most of the sellers don't have enough money to "Pay Attention" let alone making mortgage payments for a few months.
All my properties sold within 3 weeks, so the moral of this story is if you do not feel the house will sell quickly, think very hard about whether it is a good deal.
It just isn't about buying the houses, thats the easy part, it is more about can I sell the house quickly and make money.
John $Cash$ Locke
Hi Mitchell,
In most cases, no, I do not ask the seller to make any additional payments. In most instances, they simply don't have the funds to do so and as I will only buy if it is a good deal, I don't need them to do it for me to make money.
The only instance where I do anything even close to this is when the payments are current anyway and I do tell them they will need to make the payment "going out the door".
In other word, if they are moving out on January 31, they would make Feb 1st payment as interest is paid in arrears. The Feb 1st payment is actually for January's month.
If you are having to rely on the sellers making several payments for you to make it a deal, you are not evaluating your deals correctly.
I suspect more often than not, once those sellers are out of the house, those promised payments don't get made.
William Tingle
WilliamGA
Mitchell,
What you've heard on the other post is part off Ron LeGrand lease option school. The same is thought by Conti and Finkel and who know how many other gurus. If you are interested in learning LeGrand's buying techniques and other "tricks" and REI tactics, click above on the tab called "shop" and look for his Cash Flow Generator course. It is offered on this site at about 20% of it's original price.
to make such deal? Of course it is! Remember, the name of the game is to find the motivated seller.
Keep in mind, almost all mortgages are paid a month behind, meaning if the homeowner stays in house until the end of the February, he will have to make mortgage payment in March FOR the month of February.
It burns me up that Lufos seems to always get the cream of the crop, motivated sellers who are only "tap city".
Mine are OTB-over the barrel. There's no way, nunca, that my sellers have the cash/intent to make a payment or two. My transactions don't consider them. The only thing they leave me for next month is a dumpster bill.