Hello everyone,
I am able to get bank financing for 75%, but have come to realize that is not easy get the seller to accept 25%. Does anyone have deal with a situation like this? I am looking at deals right now, but I am running into this particular problem. Can anyone help on overcomming this situation, please help.
Best regards to everyone in advance.
I would owner finance to you everything I’ve got at 25% interest, if you give me close to fair market value on it!
I don’t know how the banks are getting 75%. They must know some way around the usury limit or something.
;D
Ummm… That’s not the percent interest, that’s the percent of the property value or price. :
Hi River,
I am able to get bank financing for 75%, but have come to realize that is not easy get the seller to accept 25%. Does anyone have deal with a situation like this? I am looking at deals right now, but I am running into this particular problem. Can anyone help on overcomming this situation, please help.
I got a home I’ll sell ya right now and carry 25%.
John
We talked about owner financing today in an advanced investors luncheon I run in Orlando.
We discussed a new HUD report that 40% of homes in America do not have a mortgage on them.
We also discussed that one of the investors in the room who is also an accountant is going to post on his web site tax benefits for owners to provide owner financing thru a installment sale.
One person said that in one of the local realtor boards there is an actual field to show if there is an existing mortgage on the property. One time she had to close in 5 days for a 1031 exchange and she made 6 offers to these people and 5 were excepted.
Bottom line is if you dont ask, you dont get.
Ask for owner financing and you will receive.
Hello,
I want to thank every one here for their responses and advise. This is a great place to learn and grow.
Thank you all, again.
Best regards
Juan
Hey Hutch -
Sounds like you have a great network to patch into down there in Orlando - makes me almost wish I was down there investing.
I don’t suppose you could give out the accountant’s web-site address (with his or her permission of course) for that tax benefit post you mentioned. I would love to be able to check into that.
RiverJuan, you have to toss out the concept to the seller. I am in the process of a deal where the house is for sale in Colorado at $216,900. I want to pay a first mortgage of $175,000. The Seller wants $10,000 cash plus $8,300 for closing fees (broker fees). This leaves a total balance of $193,300. The difference is that I only to pay $15,000 over 10 years at zero percent (120 payments of $208.33 per month). They agreed to this but, they want me to carry the full amount to the price of the home ($216,900). I will not pay retail on this home. I offered them up to $208,900. Comps are going for $213,000 to $229,000 in the same area with similar size homes.
I figured this will give me a chance to make the deal.
I also have a renter in there under lease till July 2007. They pay $1250 per month. The total net cash flow looks to be around $250 a month (without a property manager).
This gives me time to either sell the home in the next 1.5 years or get another renter or offer a lease option to the current renters.
What would you do?
AS for you situation, I suggestion ask the question. The worst thing that could happen is that they are ‘indifferent’. Listen to what the buyer wants from their end. This is a people business with numbers dictating your end. If you get the owner to hold ‘paper’ at a flat fee or less even (no interest over time), you are getting a HUGE discount.
This to me is one of the best ways to get involved in real estate with little cash up front.
You can probably go back to your mortgage banker and get a better position since you are paying ‘zero’ interest for this money over a long time. This is a smart position for you.
In the end, the seller gets what they want and you get the same.
Continued success!!!
JOHN
John,
If the owner accepts the 208k offer, does that mean you will have to increase the payments to the seller over 10 years - the difference between the 193 and the 208k? financing 22k 15 they want, plus 7k they “accept” on the 208 offer?
Real, the difference is that you have their money interest free. The deal fell through in Colorado. I am looking at properties in another market.
The beauty of having their money is that I can attach it to any other asset. I would try to pay them the $15,000 in exactly ten years.
I believe the realitor was using my offer as a bargaining chip with someone else. Another investor bought the house at a ‘retail price’ for $213,000 plus closing costs.
I just hate people from the ‘coasts’ who overpay for investments. Why pay retail when you can get a discount? These people did not even negotiate at all with the sellers. I was away 2 weeks on vacation and the house was sold.
What a joke!
Yes, this is a good strategy because my mortgage broker told me that you can use the 2nd note as a down payment. She says in the deal this can be structured where you would come up no cash of your own.
In this case, the seller agreed to my terms. The only problem was the asking price. They did not want to come down another $5,000 dollars. I would not go any further since I offered to pay all of their closing costs. Remember, you should never fall in love with the property but, fall in love with the deal.
Try this strategy on your offers and see what responses you get. Hey, if you can spend zero out of pocket and limit your risk, why not?
Take care! Happy Holidays!
John