help with exit strategy

Hi folks.

Need some help on my exit strategy. I have a property that I have taken sub2, 47k on the note, 17k in repairs, will sell for 102k. I am planning on offering financing of 32k (3yr note @ 9% with a balloon of 20k) on a second with the buyer getting a first for 70k. At closing, the seller’s 70k will pay off the existing mortgage, I get 6k (after repairs) in my pocket plus sellers loan payments to me.

–What happens if buyer decides to declare bankruptcy at some point? Do I not get anything until the first mortgage is released?
–Any specific clauses I should be sure and put in my loan documents to protect myself?
–Am I missing anything major?

This is a property in Texas. Any help is greatly appreciated. Thanks!


Why not offer owner financing for the entire amount and sell the note at closing.

For example, if your Sales Price is 102,000 and the buyer puts down 5%, your first postion ‘seller financed’ mortgage would be for $96,900. If the buyer has decent credit and the note is at 8%, you could sell that note at the closing table for approximately $90,000. You would receive that amount in addition to the buyer’s down payment of $5,100 - for a total cash amount of $95,100. After the underlying lien and any costs are paid off, you would net around $25,000 in all cash and be done with the risk. Sometimes taking the small discount is worth having all of the cash now.

Just a thought.