Desparately Need Help
Ok heres my question and I need some good advice on how to attack this. The property I am interested in is 2 units, each unit brings in 375 a month. The asking price is 29,900.I believe it can get appraised for 40,000. Its been on the market for a year and he really wants to sell. He said he would take between 8-10,000 down and carry the rest of the mortgage for 3 years. After I inspect the property, should i give him the 8 grand out of my pocket for the down payment and immediately cash out the equity. Or should I look for other means to finance?? Any help would be greatly appreciated!!
you should find a different way to finance - with mildly OK credit (650+) you should be able to get a loan fro 10% down and clsosing costs - about 5k out of pocket total! Then you have a long term fixed loan and no need to refi in a few years.
BUT, I'd start off by talking with him about 2 different sale prices, 1 with him financing and another with cash.
He should give you at lease a small discount (minimum 5% for cash) - this should make your purchase price closer to 27k - your new loan is basically cash.
After 1 year of seasoning, you should be able to refi the prop and get the difference between 90% of the appraisal and the currant loan balance out.
the owner is probaly building a higher asking price in exchange for fin. i would offer him lower price {25k but hey thats just me i feel you can always go up but you can't always go down on price.} "to see where his heart is". you doing your own fin. thats control of the deal out of his hands. you are the buyer take contol he is anxious to sell thats way he is offering to fin.............kenmax
If the seller is truely modivated you won't come up with 8 grand unless there is a compelling need to do so. Modivated sellers want their problems solved not money to go buy toys. Figure out why the seller wants $8k and go from there.
GOOD LUCK
If a house is listed on the market (MLS) for one year and it has not been sold, it is over priced.
What makes you think it would appraise for 40k?
8-10k is a lot of money on a 29.9k property. Find out why he wants or needs 8-10k down. Is he flexible on that number or does he need the money for something. If he needs the moey, then counter with giving him the down he wants but the monthly payment is ___ and the note is interest free. So that all the payment goes directly towards principle.
Brenda
Thanks so much to all of you for your quick response. So you guys think it would be better if I went through a bank, put 10% down and got a conventional loan. And if it appraises for higher, refi after a year and cash out the equity?? Thanks again
What kind of shape is the property? If it is not selling at $29,900, I can only guess that it is in rough shape. You may not be able to get conventional financing.
Brenda
Its in great shape from the outside, I am setting up an appt to see the inside. It cant be too bad because there are 2 tenants on each side that pay 375 month
Find out why he sell, tenant problem, debt, condition of the house, need money for something.
You might want to get an official appraisal, and property inspector before signing the contract.
Are you interested in cashflow or appreciation?
--James
He is selling because he wants to buy a bigger house so he is liquidating some of his rentals. I would sign a contract with a contingency clause. Looks like a great deal
I would offer 1K down with terms(yours not his) if he really wants to sell, he would not want 33.333 % down. sounds like a tired landlord that wants his money now.
10% down on a conventional is 3k.wonder what the motivation is and cure it.
M
So if I gave him a few thousand down and financed the rest through him for lets say 3 years, I could refinance he loan after 3 years from a regular bank when the balloon payment was due?? Thank you for all of your help, I am seeing the inside of the house today and will keep you updated on progress.