Offer 2nd Or Lien If Too Much Equity?

Hi,
I was wondering about the following scenario. Let's say the seller has a lot of equity, and he wouldn't just take 500-1000. For instance.

Balance-60k
FMV-100k

But let's say he's willing to sell for...70k. Could I take the property subject to for 60k, then offer to pay the 10k in 2-3 years when my tenant buyer refinances?

Could I have the seller place a lien on the house for that amount, so he is guranteed that....or is it better to go with a note? I'd prefer the lien idea, as I don't want to make extra monthly payments.

How would we go about structuring this? I need to understand what else needs to be signed/recorded as I'm a little fuzzy on this portion.

Comments(5)

  • Lufos20th November, 2003

    Skys the limit, whatever is best to you.

    Example: The Fair Market Value is $100,000. He owes $70,000 thus his equity is $30,000.

    You offer him $80,000 for the property that means $10,000. He indicates he will take $83,000 and not a penny less.

    You talk to him and you ask him if he really needs the money. He says he is going to stick it in the bank for a few years until he decides what to do. You point out to him that in a bank he will get maybe 2% interest.

    So you say OK I am going to give you $85,000 for the property, you take a second mortgage for $15,000 with an interest rate of 6 full percent. No payments for two years but the interest accumulates. Compound interest, the dream of every money lender since Alexander was a private. He takes it. You of course lease option the property for a payment per month more and if possible a few bucks for the option. He refinances in two years and you pick up your marbles and come to Los Angeles and date movie stars who have had their pectals altered in a big way. End of story . Now thats fun. To make it happen you just show him how much more money he makes.

    No No no tips. Just do it. Lucius

  • Ruman20th November, 2003

    What would happen if something caused the T/B not to refinance?

  • Tedjr20th November, 2003

    In a lot of states like here in Texas you would give the seller a promissory note and deed of trust to secure the financing. The note just spells out the terms of the agreement. The deed of trust is recorded at the court house and becomes a lien on the property. The deed of trust can be used to foreclose on the property by the lien holder/seller if there is a default in the payment on the note which it secures. The foreclosure is nonjudicial meaning that a judge or court are not required, actually not even an attorney if you follow the correct procedure. I would be glad to send you a copy of some sample documents to help you further if needed. I do not know if this is the same type procedure you have in your state.

    Hope this helps some

    Ted Jr

  • snek1120th November, 2003

    Great, I'd appreciate that. I do believe we use deeds of trust in Illinois. I'm not sure if it's used the same way though. We do have judicial foreclosures though, not sure if that applies to private lien holders.

  • Lufos22nd November, 2003

    Quote:
    On 2003-11-20 04:35, Tedjr wrote:
    In a lot of states like here in Texas you would give the seller a promissory note and deed of trust to secure the financing. The note just spells out the terms of the agreement. The deed of trust is recorded at the court house and becomes a lien on the property. The deed of trust can be used to foreclose on the property by the lien holder/seller if there is a default in the payment on the note which it secures. The foreclosure is nonjudicial meaning that a judge or court are not required, actually not even an attorney if you follow the correct procedure. I would be glad to send you a copy of some sample documents to help you further if needed. I do not know if this is the same type procedure you have in your state.

    Hope this helps some

    Ted Jr


    Ted Jr.

    Sneeky you copied our system here in California. This system was introduced many long years ago by a gentlemen from Australia. It works really well cause the Attorney types are not involved. Holds cost down and the paper work is negligable.

    I am glad it has spread to the great state of Texas, for gods sake do not tell Bush
    first thing you know all the states will have it.

    Affectionaly Lucius

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