Need Help On Deal ASAP!
Not sure which forum to post this in, but here it is:
Okay all, I need some help. I thought I was ready to get into creative purchases but I guess I still have a lot to learn. I talked to owner by phone and will be meeting with them tonight.
Here is the deal:
Property value: Online comps around $150,000 my research. (Owner re-financed 8/9/05, Ameriquest appraised at $174,000 to max out loan.) I think this number is off.
Loan balance: $133,000 Payment $1500/mth
Rate: 9.5% arm. I believe it just went up recently, that’s why there is a problem.
2 months behind in payments, bank has not notified them of any action yet.
Owner tried to work out forbearance with Ameriquest, but lender denied request.
Seller just wants moving money.
How can this work? Take sub-to and sell owner finance? Not sure yet if I can get $1500/month or more in this area.
How can I make $ on back end of deal?
If I decide I want to do this deal, what would be the best way to get the deed asap but still leave me an out until I finish my due diligence?
Guess I am not sure how to set this deal up and what forms I need to protect myself.
I know this sounds tight, but I am looking at two things here. I have only bought conventionally in the past, so this is opening me up to other ideas. Plus it is a great learning experience to talk/meet with the seller and walk through a scenario. It will only add to my low confidence level. Deals won’t happen if I don’t try.
Thanks in advance for all of your help and support.
Thanks John,
I kind of figured as much. I am not acting as a motivated buyer as much as I would like to still meet with the owner, and look like I am coming across as professional. I still would like to show them my purchase plan will not work in their case. For a 30 minute face to face, I feel the experience will be invaluable.
I just thought I would throw this out there and see if any ideas come in. Thanks again for your time to answer my questions.
Don[ Edited by ttime on Date 08/04/2006 ]
Watch out for a prepayment penalty equal to 6 mths interest on the Ameriquest loan. If the payments are $1,500 that could be about $8,400. Request a payoff statement to verify before you take this over.
Thanks dirtman, that might have been an easy one to miss.
Since your seller has had this ARM loan long enough for the fixed rate period to expire, the prepayment penalty might not be too onorous.
Six months interest on $133K @ 9.5% is $6317.50 on my calculator. Even if you have to pay this much penalty, there is enough room in the back end to recover this in your profit. Raise your sale price to $165K.
The key to profiting in this deal is having good comps in the first place,.
I am a newbie here and was reading the posting. What was the outcome?