Creative Owner Financing
Our house is for sale ($795,000) and we recently purcahsed a home for $650k and basically have a rich uncle financing the deal on the new home. He wants the cash back in about a year to two years time. However, our current home has an offer, $100k down, monthly payments, etc.
How should we really structure the offer for our home. Should we demand collateral (ie airplane, bonds, stock, equipment, etc), a large downpayment, high percentage of interest? The exposure is quite large and not willing to risk that amount of money on our part.
Any advice would be helpful, thank you!
Lucky
Dont understand your post. Why not send the buyer to a mortgage company to get his funds and pay you off?
Sorry, the buyer is starting a new business and can't have any large cost items on her balancesheet until January of next year. So, owner financing until then is necessary. How would you structure this?
Thank you!!!!!!
do a lease purchase non refundable option deposit...100k down....
lease out at 15-20% about market mortgage monthly....
add 50k to asking price....
term 18 months to get the financing....
play hard ball with the risk you are facing....
It sounds like after January she should be able to get a regualr mortgage, is that correct? Instead od the 18 months like DaveREI suggested, why not cut it to 4-6 months?
Why would a home purchase end up on her balance sheet? Is she purchasign the house in her company name?
No, the house should not show up on her business balnace sheet. It would however need to be disclosed to the financial institution that is financing her new business venture. It would show up on her PFS.
Just a thought what she meant by the post.
Her balance sheet is a personal with business interests. When you apply for a business loan, they also look at your personal finances. She indicated that she would want to close after the 1st of the year. However, I'm thinking apurchase needs to be made upfront rather than a lease/option. The lease/option seems to have to much wiggle room. When working on this amount of money ($795k), I can't have doubt at a later point, I'll loose a lot of sleep over it. Question, should I demand collateral in addition to the $100k down payment? I still have a note outstanding on the $795k sale price of about $415k.
Thanks sooo much!!!
The colateral for you would be the property you're selling to her. Asking for something else would be pushing the limit. If she doesn't pay you during the lease period, then you evict her, get to keep her $100K and find another buyer or tenant. That's the way lease options work.
If you're uncomfortable with the idea of doing some sort of owner financing, then your only option is to sale it outright. Since she seems unwilling to do that, you'll have to find another buyer.
It's your choice, but start paying 2 house payments for a few months and you'll become one of those 'motivated' sellers that we investors hold dear to our hearts.
Roger
You could sell the house Subject to the existing financing staying in place, get the downpayment of $ 100K, the monthly payments should be what you are paying to your lender + $ 200.00 for you, and have her refinance after 6 months. This way you are safe.
If you get John Locke's manual, it will explain the whole thing to you, and you would have the contrac, etc. Have an attorney review the contract and other paperwork to have it specific to your State, and you have made your first creative deal!
Success to you!
Ladybug