Hi everyone,
I need a little help on a possible deal I have put together. At this moment, I have a standard contract on a property for $636,000. When the seller and I spoke 2 weeks back, we left off that he probably wanted to deed me the house, and walk away from the monthly payments (approx. $3300) but that he wanted a little while to think about it (the house was appraised at $715,000). I would love to get the deed and offer seller financing and finance the house myself, but I don’t think the sellers want to leave the loans in their names for the remainder of the payments. They are also concerned about not being able to get another loan while this one is in place, and have been talking to a friend of there’s who is a lawyer that just doesn’t “get” what I’m trying to accomplish by getting the deed. I would try and do a lease/option, but are the monthly payments too high for that? Also, if I do get the deed and cannot find a retail buyer or tenant buyer, I’m a little concerned about covering those payments for a few months (the seller agreed to pay Sept. and Oct. I would pick up after that). How should I go about structuring this deal, and make the sellers feel comfortable about leaving the loan in their names? Any thoughts or comments would be appreciated.
Thanks,
Tom
Howdy Heybuddyhewguy: Howdy Doody: How are you:
I know what Cash will say. If they ain’t motivated enough to do the deal the way you need it to be done they ain’t motivated enough and you should not be a motivated buyer. There are other deals. Is this 10 units or closer to 15 or 20. I personally would be frightened as hell to do a house this size. The good thing is if it appreciates in value you will win and win big. It is a big gamble if you can not put together enough reserves to carry the property for 3 months at least. The attorney is going to screw the deal up so it is a mute point anyway. You may be able to lease purchase it and then do a sandwich lease purchase. These are a lot more risky in that you may never get the rear end to pay off. If you think the cash flow is going to be tight it will be. Can you make money on your down payment vrs. a down payment you can get from a tenant/buyer?
Ways to get seller to do sub2: Make it a shorter term deal than the remainder of the loan at least 3 years and I would prefer even 5 which may be forever to them.
Put a cash reserve into escrow of 2 to 3 months payments where the payments would be made if you are approaching 30 days late.
heybuddyheyguy,
Glad to meet you.
Ted hit it right on the head. There is a point in my presentation to the seller where “they must sell me on why I should purchase their property.”
If they do not convice me to purchase on “my terms”, then I bid them a Good Day and leave. If this does not happen this way then you could fall into the trap of becoming a "Motivated Buyer"and make a bad deal.
From what I see in your post there were objections that you did not handle, in other words when I am speaking to buyers, “questions are answered by what I say before they become objections”. I have already covered, can I buy another house, which is a known objection from sellers.
“Normally folks my buyer refinances in two years, sometimes in less time, however I am only giving you the norm of when the loan will be paid off.” To stop the who are you selling to objection “They are good people who may be new to the area and the banks want 2 years residency or have had a little credit hicup, however I work with them with my mortgage broker to make sure they can refinance as soon as possible.”
Before I arrive at the house, I know what I am going to pay for it, how long it will take to sell, and how much profit I will make on the property. As a matter of fact thru research I probably know more about the area than the sellers do.
When they talk about their attorney, I say “my “REAL ESTATE” attorney is one top ones in the state and an expert in the field, why don’t you have your “REAL ESTATE” attorney talk with mine, give me his/her name and I will have mine call yours.” How many ordinary sellers have a REAL ESTATE attorney?
John $Cash$ Locke
Thank you both for the quick responses. Cash…you mentinoned that before you go to the house you know what you’re going to pay, how much you’re going to sell for and how much you’re going to make. What is the best way to go about doing this type of research…I mean, it must be so much easier knowing all the “unknowns” before you even enter a deal. I work with an agent to run my comps, rents in different areas, etc…Should I have him run comps of similar houses that sold in the last 6 months? Is this the best way for me to heavily research the area to get these answers? What if this agent that I work with is not too familiar with this particular area that the deal is?
heybuddyheyguy,
I do not use realtors for anything and let’s jsut say I have my own reasons.
However, I do use www.sitexdata.com a young lady student of mine there by the name of Aimee will tell you why.
John $Cash$ Locke