Plan Of Action But Is It A Good One?
Ok guys,
Here is where I am at I thought I would pose this question this way. I have a plan of action concerning a deal I am trying to put together want to know what you think.
Ok, I have a buyer who has $35,000 down
I am looking at purchasing a Home Conventionally
Then doing a contract for deed with my buyer taking the 35,000 down.
Then in 1 to 2 years as part of the contract they are to seek Financing for the home... of which I will assist them by providing a proven faithful payment history over the year or 2 years.
I will ofcourse make money on both ends with a positive cashflow in between.
Ok, pros and cons or better yet, input or idea of how to do this better....
My goal, 1 to get the Down in my pocket. 2 help get them financed in 1 year if possible or 2 but to make money on that end too
Q; Should I purchase the home conventioanly?
Any input appreciated
MarkB
Mark...nice meeting you. If you can purchase a home that is acceptable to your buyer at a considerable discount it is possible to pull it off...we are talking 30% or so below market with a no interest or low interest loan...remember, you are getting their $35k but that is also readjusting the SP & you cannot achieve all 3 by buying a home at market value & raising the SP by 10% or so to make up the difference...one needs wider tolerances with large downs if you are going to pocket them...what you are attempting to do is achieved in subject to & lease option scenarios successfully & with 5-10% down & selling on a future appreciation value over a 1-2 yr. option or CFD period...generally the seller will 1)collect an up front option non-refundable deposit 2) raise the interest rate 1.0% or higher to cash flow and 3) collect the appreciated value + his original equity position in closing the sale...hence, he profits on all 3 fronts...check out the lease option & subject forums...regards, CWal
RonW,
Can I borrow your credit rating?
Very nice and well thought out plan. I am not very experienced so I can only speculate. My plan is similar with a few precon properties to flip or possibly hold. My suggestion would be to add some cash flow properties to your portfolio, possibly some multi-units with less reliance on appreciation and more of a secure long term plan with positive cash flow.
With your situation (cash, no debt, high credit score) you could acquire some apartment units that both cash flow and appreciate, depending on how smart you purchase.
I am sure there are others with more experience that can lend advice. My theory and plan of action moving forward includes divesting. I am in the process of purchasing a couple of precons, but I feel more comfortable with some cash flow properties as well.
Betting on appreciation is not a good habit to form.
Take care,
[addsig]