Creative Seller Carryback For MF
If I find a lender who will do a 90% LTV with up to a 10% seller carryback (1.) what "creative" ways can the seller do the 10% if the lender doesn't care where the 10% came from?
Now if I could walk away with cash at closing that would be sweet. 
(2.) If I can get rents and deposits for the month that would net me cash at closing but can anyone think of anything else?
Second deed of trust. 5 year interest only note with balance due in 5years. Has worked well for me. Try to get the seller to give a concession for repairs. The only problem with a seller concession is that the property has to appraise for that value.
clevincc so in 5 years I will have to pay the balance off? I thought seller carry backs were the responsibility of the seller.
I need more info on a second deed of trust so I will do some research unless someone here can explain it.
Take the time and research the glossary of Real Estate Terms.
Eric & Rosa
[addsig]
hello einstein!
a second deed is simply your 10% down payment that you "borrowed" from him so you didnt have to come up with cash at closing. you have to pay it back sometime.
So the 2nd deed of trust can't be forgiven?
I definitely have to research it. I am just looking for ways to "look" like I put 10% down just in case the seller doesn't want to do a 10% seller carryback. I really don't think the lender cares.
Quote:
On 2003-10-24 14:44, rgibson wrote:
hello einstein!
a second deed is simply your 10% down payment that you "borrowed" from him so you didnt have to come up with cash at closing. you have to pay it back sometime.
The lender will care because the 10% has to be w/i the appraised value of the property. You can't inflate the property value by 10% and have the seller pretend to carry the 10% so you can get 90% financing. Also if the seller carries 10% and even if you are approved for 90% ltv, you would still need to get approved for 100% cltv. The seller can also forgive the carryback if they so wish, but they would need to be aware of any tax issues by doing so.
Quote:
On 2003-10-24 15:08, jmBROKEr wrote:
The lender will care because the 10% has to be w/i the appraised value of the property. You can't inflate the property value by 10% and have the seller pretend to carry the 10% so you can get 90% financing. Also if the seller carries 10% and even if you are approved for 90% ltv, you would still need to get approved for 100% cltv. The seller can also forgive the carryback if they so wish, but they would need to be aware of any tax issues by doing so.
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That sounds duable! I researched the second deed of trust - I don't want to have to pay the 10% back to the seller so I will definitely have to find motivated sellers do as described as above. Anyone else?
Let me clarify this:
Purchase price $100,000
My loan $90,000
Seller carryback $10,000
The seller gets a 2nd loan for $10,000, then gets $90,000 after closing. Then respectively he could pay off the $10,000 immediately and forgive the loan correct?
(1.) How does the seller go about getting a 2nd? Just go to any bank and apply? (2.) Is the best way to just refinance after 1 year, consolidate the 2 loans thereby paying off the seller?[ Edited by fmmp on Date 10/24/2003 ]
I sent you a PM-check it for some more details.
As stated by a previous poster, the lender will look at the combined loan to value.
You do not have to wait a full year to refinance. If you do, you will get a more competitive rate, then if you would if you refinanced within the first year. The lender who is doing the refinance wants to see your Schedule E to determine how much money you are really making.
Respectfully,
Phil
Phillip Herrejon
President of the Chicago Real Estate Investment Club
[ Edited by Pherrejon on Date 10/29/2003 ]
Hi, I got one the other day to unravel. It seems a property was sold for $200,000. The loan was for 75% which is: $150,000. loan made by Mortgage Co. The Buyer put down the sum of $20,000 obtained by a side loan from a dear friend. The Seller took back a second trust deed bearing an interest rate of 8% all due in 7 years. Monthly payments of $300 a month. Face of second was $30,000. Seller to pay all costs of escrow, title insurance co. Etc. Buyer at no expense.
Looks straight forward. A small Calif. Mortgage Co. made the lst loan. All recorded and the Buyer takes possession of the property.
A random search of the title 60 days latter shows that the second trust deed has been reconvayed.(paid off) But, here we go. The Trustee who had been substituted in that issued the full reconvayance. Guess who the Trustee was? Right on it was the Seller.
In the meantime, back at the ranch. The Mortgage Co. that made the loan sold it by assignment to a nice friendly Investment trust located in Denver Colorado.
Investigation then shows that the true sale price of the property was the amount of the lst mortgage. $150,000. The downpayment had been returned to the third party who fronted the amount. The second Trust Deed taken back by the Seller had been reconvayed. All expenses of the transaction had been absorbed by the seller.
The Denver Trust, newly assigned owner of the lst mortgage was annoyed. They felt that while the loan was performing there was no defendable equity.
Given all the above. The Denver Investment Trust. Then suggested that the Mortgage Co. take back the Mortgage and give them their money back.
The Solution which we suggested and all parties concurred. The Mortgage Company issued to the Denver Investment Trust an Agreement giving them full recourse on any loss and an agreement to accept reasignment of the Note and Trust Deed on any Default.
Interesting a reappraisal of the property and supported by proper comps showed a Present Market Value of $200,000.
All that skullduggery for nothing. Except of course the New Owner got the property for $150,000 with no investment at all. The Seller took the loss, and there were others. Still cannot imagine what he was thinking.
In the interest of sanity and a future profit we agreed to substitute in as Trustee on any delinquency and to conduct a proper Foreclosure Sale. Our profit would be the costs and fees of foreclosure. And, oh yes the property at the completion of the foreclosure sale on payment of the unpaid balance to whoever was the Beneficiary on that great and future date.
An overbid at the sale? Impossible.
"The Con becomes so compeling that the Players loose sight of the purpose of the transaction and conduct the transaction as if it were a game and only a game with no other considerations."
Kid Yellow Gloves. 1931.
Go figure. Lucius
I am confused...........
1. Who actually pays the seller carryback? Seller or buyer? I thought it was the seller but someone told me the buyer yesterday.
2. If buyer pays what are the general terms that are feasible for the buyer?
EX. 5 yrs at what % int.
3. The carryback can be forgiven so how does the seller get their name taken off of the deed?
why would a seller pay to their own mortgage?
fmmp,
No offense buddy, but you are definitely confused as to a seller carryback.
A carryback, seller 2nd, 2nd loan, owner financing are ALL loans. These are loans that you, the buyer, will have to repay.
So if you have a $100K purchase price with $90K bank financing and $10K seller carryback, you'll owe the bank $90K plus interest and the seller $10K plus interest. All the seller is doing is acting as a bank and lending you the downpayment.
As others have said, the primary lender will have to allow for you to have a combined 100% loan ot value.
Roger
Thanks for clearing that up! I fully understand now.