Offer Structure Ideas?
I have a property willing to entertain sub-to as i explained it. however, the couple has about 100k in equity and a 60k note left. they want 160k for the place, obviously. haha. area comps for 175k avg ($130k-220k roughly) i'm trying to avoid having to go into my mattress for the $100k to give him down 
what i think, is offer him 70k in cash and take over payments. i can lease for over 1400 in that part of town - so if i find the 70k (mattress), i could be swimming well for profit in 2 yrs. but - let's JUST SAY i couldn't! how would you build something creatively for it?
t'anks in advance creative souls. somehow i'm sending in an offer tomorrow. and next monday and so on, until i get it.
They want 160K and you are going to offer 170K?
Hey I have a car valued at 55K but I will let it go to you for 65K.
Why you want to offer them so much?
Mr Mike,
I think what he is actually saying is he will pay them 70k instead of 100k and take over the remaining note of 60k. That is only offering 130k instead of the 160k they are asking. [ Edited by samiz on Date 12/08/2003 ]
right on samiz!
what kinda car mrmike? maybe i'd be interested.
come on dude!!
jackman,
you dont mention whether the sellers would be interested in any owner financing with their equity.
you can talk to them about a steady income stream of $$xs/mo (maybe even interest only) and then in 2 years when your buyer refi's, your seller gets a balloon pmt equal to what you would have paid them out of pocket now (part or all of whatever you decide their equity is worth). How you structure could depend on what kind of buyer you find (do they have a big or no down payment? lots or little monthly cash flow? etc).
Lots of options...
Molotov
mr. cocktail ... i mean, molotov
yeah, they're open to anything. at first, the wife wasn't sure her hubby'd go for it, because she wasn't sure about the whole idea of it. so he called and he was more ok with it. he doesn't understand much of it and neither do i, for that matter, but he's open to HEAR anything. he did say tho, that he's not really wanting to carry the whole note.
he's not very flexible for a fsbo but at least he's willing to listen. he's already in FL, wife is still up here to get the house sold, but he still answers all "technical" question, via phone. she's here with POA to do all transactions, so no probs there.
i hashed all the give her 25% of equity in cash and ask them to carry the rest back, plus note and it doesn't leave any flow, nor does it sound good to them. my first offer was like that, and they still speak to me, but never brought it up, like i never sent it!
I don't know your experience but I'll share my first investment experience with you.
I purchased a property for $180,000 and was dead certain that the property had an ARV of $240, easy. I got everyone's opinion thinking that I should make sure I'm doing the deal right. I spent $40,000 on fixup and holding costs and it took me all summer. I thought I would still be ahead $20k! Good for my first deal I thought. Well worse comes to worse and I couldn't handle the holding costs any longer. The market was very much a buyers market because of the time of year in Iowa.
The comps ranged from $210k-$270k. Worse came to worse and I had to let the property go for $205. I lost $15,000 and didn't get paid for any of my work!!
Moral of the story is to use the bottom end of the market as your target price for selling. If you can make money in the worst possible senario, then good <IMG SRC="images/forum/smilies/icon_smile.gif">. You can still try to sell the property for what you think it is worth but the extra is icing on the cake.
You mentioned that the property could be worth $130k and you want to buy it for that? Yeah its likely worth more but is $10,000 in one month or $20,000 in 3 months better? Holding costs are a b**tch.
GOOD LUCK[ Edited by myfrogger on Date 12/08/2003 ]
Have the buyer refinance up to 130K. They keep the cash diff. between old mortg. and new mortg. balance (60-70K). Do the sub-2 on the new mortg.
They get cash. You get cheap house.
Good luck.
Sam
samedwin: good idea. i actually knew of that, but just didn't think it would apply here. they want it completely out of thier hair (thier words). but i'll still submit it as an option - it makes great sense. thanks!!
myfrogger: good story, good point. i SHOULD think like that, but the area of town that home is in, is blowing up right now. EVERYbody wants to move out there, so i tend to not think i'd be needing to hold it long. but like u said, neither did u! i'll definitely weigh this in to my decision. thanks for the input!