Need Help!
I am new a newbie to L/O and I just ordered John Lockes course this morning, but I beleive that this is a L/O topic instead. Not being able to reveiw the manual yet I need some immediate assistance on a deal that just fell in my lap.
I have an owner that currently lives out of state and has a townhouse that he is looking to unload. All payments are current and the property is in good condition, but he is trying to buy a new house and is trying to unload this of his credit.
This property has a loan of 72,500 (assumable) with a 7.25% interet rate. The CMA is at 82-84K. The HOA fees are currenlty at $315. Rent is projected to be at $1,000. When he mentioned that he had 72,000 on the loan he also mentioned that he might consider selling the property for a little less.
The only solution that I can think of is maybe sign a contract with a "subject to" clause stating that I have to find a L/O purchaser in a certain amount of time or the deal is no good. If I do find a L/O buyer then I will assume the loan and take over ownership.
Please let me know if I am missing something. Being new I'm sure I'm not considering all of my options.
Thanks for your help!
What type of loan is assumable?
you can l/o the prop. yourself and then find a t/b to l/o from you. km
If I lease option the property then he will still have it on his credit which is hurting him get a new loan.
Am I right to assume this or am I missing something?
If you l/o the property - yes it will still be on his credit report - and the same will be true if you take the property over subject-to.
I suggest Lease Optioning this proerty from him and then find a tenant buyer to l/o from you... At least this way it will be on his credit report AND he will have rental income from it - namely your rent payment to him - that will offset his debt to income for at least 75% of the rent...
Good Luck
[addsig]
Are you going to buy or L/O?
You don't assume a loan on a L/O, do you?
What type of loan is assumable? fha?
What are the payments on the assumable loan? Escows included?
what is his payment...495./mo.?...if the condo fee & taxes are $515/mo...and the fmr is $1000....wouldn't you say that was a little thin...CWal
yeah, it seems like there is no room for rental profit if you rent for 1000 fmv and assume the loan with the current terms.
you would actually probably be paying a small amount each month towards the mortgage out of pocket.
you must either increase the rental amount to @ 1.2k so that there is some kind of profit and escrow being built up over the term of the lease option you have planned with a new tenant.
No matter what the owner does, if the property is not sold outright from him it will still remain on his credit bureau.
also most lenders will only give credit for 75% of the gross rental amount.
all things considered I would walk away and not waste time on a deal this thin, there are way too many out there that are much fatter.
dlwill 8-)
there can be room. but you have not given enough info. basically what is your total payout to the seller per month, all fees included. if you l/o the prop. to a t/b it is easy to get above market rent because the t/b is "buying" financing. people that l/o have most probaly been turned down by banks. they see the l/o as the only way to purchase a home and rebuild their credit. for this they will pay a premium. higher rent than normal and 3to 5% as a non-refundable option payment plus if its a lease for say 2 years you can add 2 yrs. appreciation to purchase price..........km