Builder/rehabber Called Me
Seller called me up and said he has a house to sell. He is not behind in payments. I was careful about what I asked him so I did not scare him away so I dont have any $$ details? But thats not the point.
Anyhow he built/moved this house to a lot with money he got from a friend. The catch was that he needed to sell and cash her out in 1 year. The friend ran into hard times and wants her money now. Short of getting a loan and cashing her out, do I have any seller financing options? I cant think of anything that would I could to with little money to get into this property. Does anyone see something I dont?
Bill
The first thing that you need to do is get the $$ details. What good does it do if the house+new lot+cost of moving the house has made it overvalued? How much does he owe and how much is it worth are the first questions you need to get answers to. After you get answers to those questions you can go forward or go back. It may not be worth what he needs to get.[ Edited by Sandbahr on Date 01/15/2004 ]
Hi there Sandbahr
I have not checked values but he said he would sell for about $125,000 if he had time. I would agree with that number for now. He said that in order for him to make any profit he would need to sell for 100k so I take it he owes his friend most of the money. Does that help?
Well, if it were me I'd be on my way to the court house to see if I could find out what mortgages liens ,etc. the guy might have out there that he may not be telling you about. I'd also call the assessor and ask for last date of sale, amount of sale and also if any back taxes are owed. They will answer your questions as tax info in our state is open to the public. I guess though that your question is more about how to do this with little money as he owes money to his friend. I don't have an answer for you on that. Maybe someone else does. I just always get Balloon notes myself and use my other properties as collateral/down payment. I'm not into the creative stuff too much.
In addition to the above you really need to get some comps. Just ask a realtor to help you out here.
You definetely want to see the house. How much money do you have to put into it to finish it?
Oh yes...the price.
Remember...he who mentions the amount first ALWAYS loses!
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Well I got a few more details on this place. Its 60 years old but was completely remodeled, new everything. The woman borrowed this guy $70,000 dollars with the understanding he would sell within 1 year and give her back $85,000. He would like $15,000 out of the deal for himself for a total of $100k. There are no liens on it at all. I am working on comps although I think they would come in at 115K.
He said he has no problem having me deal with her on the money side of things. He told me she NEEDS about $40k to finish an addition on her house. I was thinking I could maybe tell her that I will give her $40k now and for her needing the money early I would give her either a note for her other $30k or give her something when I sell. How does that sound? I would also need to give $15k to the seller. The problem is where would the money come from?
How does this change things? I am not sure how I would write up a contract, since they would both be involved.
It would seem to me that it would be a lot less trouble for you and for them if you could just buy the house outright with a conventional mortgage if you could come up with the 20% down. Other wise you could have the seller take a second mortgage for your down payment. I'm not familiar with how this works but I've heard about it elsewhere Maybe someone else knows how that works.
Yes that would work. I though banks want money down from the buyer no matter what to show liability in the property. I am sure she would carry 20% or more but I dont know if the bank would care.
Bill, You had several posts on trying to do these deals lately but you seem to be putting the cart before the horse in a way. Perhaps you should be looking for an investor to work with you or look for a banker who will be creative with you. Perhaps you have a friend who would be happy to give you the down payment money if you agreed to give him some interest back for his investment. I mean there are a lot of people with money in the bank or money market funds earning less than 2% who may be happy to lend it to you for a return in six months of say 10-12%. Wouldn't it be better to look for deals and be ready to go with them? Just think how great that would be for you and for the seller.
Sandbahr just gave you some great advice there.
This deal can definitely fly if your have your money source lined up.
Here's one way you could get it done.
Let's assume you find your Hard Money Lender.
Write up a contract offering 70K cash, and include an addendum with a so-called equity sharing clause.
This is what you'll have in there.
When you resell the property you get 10K profit off the top.
All your costs are then deducted, and the remaining profit is then divided between you and the seller.
This way you leave it up to him to negotiate with his lady lender, and if your offer is accepted, you have your profit locked in.
Just keep it as simple as possible.
Good luck.
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If you are looking to flip this property why not get a qualified buyer for the property? Use your option so you can be paid at the close. This is usually a win win situation for everyone. you don't even have to come with any money out of pocket just the ad money
If you are looking to flip this property why not get a qualified buyer for the property? Use your option so you can be paid at the close. This is usually a win win situation for everyone. you don't even have to come with any money out of pocket just the ad money
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