Carry A Second
I have a couple of properties and decided to sell one. I am having a hard time selling it and a prospective buyer asked my real estate agent if I would carry a second for 6%. 1: this seems low. 2: What are the cons for carrying a second for the buyer. What do I have to lose so to speak.
i took back one second for 5k. he has made almost no payments. I knew going in that he had bad credit and was probably in over his head, but I needed to sell the house and we were at the closing table when his private lender reduced the loan amount.
so I have gotten almost no payments but I threatened foreclosure (a total bluff, I would never get my money back at a an acution) and he offered me 4 cemetary plots worth about 6k retail. better than nothing.
Thanks
As tbird 56 points out. A lot depends on your situation. If you need to sell, is it a problem if they don’t pay (and most likely they won’t), how does the money you get from the first play into your needs, how much do you have in the property, do you even care if they repay. Example: I bought a property, 3.75 acres with older double wide MH for 30k. Sold .58 acres for 10k cash. About a year later these dead beats wanted to buy .50 acre with the double wide MH for 30K. Their bank would loan 20K and I would carry 10K. You guessed it. They made two payments and haven’t paid since. However, the 20K the bank paid me gave me what I needed. Money to buy back retirement time so I could quit my job and do other things. I really am not worried about the dead beats making payment to me. In 10 or 15 years they will have paid the bank off and then I will be first in line (I hope that is how it works) and will get the property back. It will be worth more than the 10K they owed me. So, it all depends on your needs. After reading other post here I hope I haven’t made another mistake. I charged them 1.5 percent interest per month = 18% APR
apexnotes: I am interested in your post. Do you carry 40% so you can get the property back without having to put so much of you money in the foreclosure deal if they don’t pay? What are your thoughts??? I have 6 or 7 other properties I am thinking about selling but read on this forum about capital gains, holding for year and a day, can’t charge too much interest and a host of other things. Kind of makes me just want to give the properties away and go live in a cave with ole bin - NOT
owners carrying paper is almost always an enticement
for buyers to more easily facilatate the transaction.
Sellers are either really hungry or the property needs
additional marketing strategies to sell, for what could
be numerous reasons. The most important thing is,
do the numbers make sense and does it fit in well
with your overall plan and ambitions. Sellers offering
to carry 2nds right out of the gate, usually means they
are ready and motivated to sell. to find out how ready
they are, be aggresive, negotiate well.