Hi Everybody,
I’ve been reading posts on this web site for some time and decided to give it a try to ask for some ideas on how to sell a property that I need to sell. I’m not sure where I need to post this but I’ll start here.
I have an old house on the main highway through a suburb of a certain metroplex. I have used it for my photography studio for 5 years. I have since closed the studio and now I want to sell the property. It is “seller financed” and I owe about $86,500. It is on the tax records as being worth about $101,000. The Promissory Note says that I cannot sell, lease for more than 3 years, lease with option to purchase or otherwise sell the property without prior written permission of the seller. I haven’t been able to find a buyer to outright buy the property so I was considering offering a Lease Purchase Option deal. The problem is, I’m afraid the seller won’t give written consent because he would rather I just give the property back to him. I also have very bad credit and no money because the photography business has been very bad for me the last couple of years. I’m am so new to the Creative Real Estate Investing world that I’m not sure what to do about this. i thought about trying for a hard money lender to buy out the original note for about a year and then try to re-finance if I need to but …I don’t know if I could get a loan.
Anyway, I’d appreciate any ideas
The property is zoned general retail, it does need a little bit of fixing up but mostly in good shape. GREAT location.
Thanks ahead of time for any input.
kcintx
Howdy Kcintx:
A hard money lender will only loan 65 to 70% of the value of the property which would leave you about $10,000 to $15,000 short on paying off the note. You will also incur closing costs and points of at least another $5000. The hard money idea will not work for you. You possibly could get other types of loans even with bad credit. Over 90 days late on mortgages are not considered by most companies. Even BK is OK especially after one year of good credit. Your credit may not be as bad as you think.
I would have a heart to heart talk with the seller you bought it from and explain your dilemma. They may not want the building either and may work with you selling it and owner financing. The mumbo jumbo language is put in most notes and they may not even care what happens to it as long as they get their payments. It will not hurt to ask.
Have you tried just renting it to another business?
Hope this helps some.
You mentioned that the tax records show it being worth $101,000, this value is usally about 80-85% of the appraised value (about $119,000). Since you owe approximately $86,500, you’re currently at a 73% LTV. Advertise selling it w/ owner financing w/ 10% down (about $19,000) and then carry a 2nd mortgage for the difference between the $100,000 that the buyer now owes and the balance of $86,500 that you owe the seller ($13,500). You can structure this note however you choose, 10%/yr. w/ interest only pmts. due in 3yrs., if you need the cash for the note, you can always sell it at a discount. These numbers are for illustrative purposes and can be changed to what ever works best for you. Hope the concept helps.
Thank you so much for your ideas. I appreciate your help. However, with that clause in the Promissory Note about the seller having to give me written permission, I don’t think it will work. Because he (the seller) has already called me and wants me to keep him informed and he mentioned that he would be glad for me just to give the property back to him.
I have been trying this last week to get it re-financed or an equity loan out but so far have not had any luck. Although, not all the mortgage companies have given me an answer yet, so I guess there’s still hope. I do need some money out now to pay off some bills and do some other deals I would like to do.
I do appreciate your response.
KC