3 Offers
I have a seller who's motivation is a job change to an area that's 60 miles away.
When you live in the MOUNTAINS(!!!), 60 miles can be a BIG DEAL!
He was originally planning on doing a L/O and has advertised in the local rag.
He's only looking for a 1 month security deposit with a little bit above market rent. Market rent is about $850.
He's a young guy with a starter-set family.
In my initial talks with him, he's open to just about anything in terms of creative solutions. He doesn't NEED his equity immediately but it would be nice if he could get some of it.
HOWEVER, he needs assurance that he can qualify for a mortgage in his new intended city.
That means a preservation of his debt/quity ratio.
The house appraises for $145K.
He has about $47K in equity.
Since he seems to be so flexible, I'm planning on offering several options.
1) I'll L/O his house with the intention of a sandwich L/O to another tenant/buyer. I'd pay his full $145K and his security deposit requirement. I'd market the house to another T/B for a %5 downpayment and a slightly higher rent and a higher purchase price. Exit strategy is to sell to the T/B within a year.
2) I'll purchase his house subject to the existing mortgage. I'd give him a couple thousand cash and ask him to take an interest-only note for the balance of his equity. I'm thinking about offering him %7 payable annualy with a balloon final payment in 3-4 years. Exit strategy is to sell L/O to a T/B quickly.
3) I'll give him %5 down in cash if he'll carryback the other 95% of the balance. Exit strategy is to sell L/O to a T/B quickly.
What do you all think?
I'm open to any and all critriques and/or alternative strategies.
Why would you offer him any interest??? Just give him a note for the balance, and make no mention about "interest". Just state 1, 2, 5 K now and 200/mo with baloon in 5 years.
Best of luck
Sam
It seems to me that you are another Peter Conti's student? Most of CO CREI are
Well, I would in your place intend to purchase this house subject to the existing financing and would do the split equity on the back end. My contract will spell out that the seller will get $23,5K in time when I sell the house, one or two years down the road and in the mean time I would try to purchase back that note on discount 6 mo after the deal is signed. If this part is not to clear, take a note that the seller would commonly get a second mortgage note to protect his interest.
Let us know how it goes. Good Luck!