Stop reading real estate for awhile been working 2 jobs to save money for the business. My mother n law has been renting a house for 5 years. The owner is unloading all of his properties to his tenants first at a substantial discount. Here’s the deal House valued at 60,000. He wanting my nlaw to have it for 12000 cash or give him 3000 and and he would owner finance the nine thousand or because she wanted to be able to make some repairs he suggested selling it to her for 42000 and at closing he still gets 12000 and the take the 30000 to do whatever, repairs bills hes a relly nice dude and always has he’s up in age now. But my nlaw has no money and not good credit to get financing. What i would like to do is get my grandfather who has a coulple rental properties himself and superb credit score to go with option three and basically split the 30000 with the nlaw. How do I go about doing this all of a sudden Im so lost and nervous and do not want to lose this deal as I have let 2 other great deals slip through my hands. I have to act fast. Any incite would do. This would be a great start for me.
Here’s what I understand:
Buy house for $12,000 CASH or…
Buy house for $3,000 cash plus seller finances $9,000 or…
Buy the house for $42,000 by getting a loan for $42,000 and giving the seller $12,000 and buyer pockets the rest for repairs…(!)
Mother-in-law buyer has bad credit and no cash. Grandfather has good credit and some cash and could buy it.
Question: Who valued the house at $60,000? When? Why?
Mother-in-law cannot get financing from a bank.
Grandfather can not get OWNER-OCCUPIED financing from a bank.
Who is going to come up with the downpayment for the bank financing?
Who is going to make the payments on a $42,000 debt?
I don’t like option #3 at all. It sounds crooked and squirrelly. I don’t think the bank will lend. Has anyone talked to a lender yet? Bank fees for this mortgage will be some thousands on top of the downpayment.
Why Not----
- Ask seller if he would carry the loan with less downpayment, say $1,000. Just enough for his closing costs. Be sure to get Title Insurance. Offer $1,000 more on the sales price if he balks.
OR - Grandfather lends $3,000 to mother-in-law. Seller carries $9,000 loan. M-in-law now makes 2 monthly payments. If house needs repairs she saves her money up and makes the repairs.
KEEP IT SIMPLE.
DON’T BORROW MORE THAN NECESSARY.
DON’T PUT LOW INCOME BUYER INTO A HEAVY DEBT.
Good luck, and let us know how it goes.
Furnishedowner
Ultimatley my wife says Im too nice and trying to help everyone out. The 60000 is from an appraisal. My wife says get a mortgage for 42000 on a fixed rate for 30 years. Here in alabama which 40000 is the minumum here. Pay the seller his 12000, pocket the rest. Get needed repairs about 5000. Lease option purchase to m n law with no down payment as due to the situation being fair and trying to help family. And she pays the monthly balance plus 100 on the loan. M n law just does not want to move and loves the home. All in all she will save about 150 dollars on her current rent and now she is paying towards owenship. Either she does this or the owner sells to someone else for another investor at 70% maybe of FMV and she continues to rent. Help me out please in anyway you can. I would love to talk in person to give details. Thanks in Advance.
It is illegal to do option #3. enough said.
Option 3 is completely legal as long as the terms of the deal are fully disclosed to the lender.
Contract for sale is for $42000 with a $30000 seller concession for repairs. Chances are the bank will hold the $30K in escrow and use it to pay contractors as repairs are completed.
Sale price does not have to be $42K, for this deal to work. As long as the seller gets $12K, there are a lot of numbers that will work. How about $18K contract price with a $6K repair concession?
Well basically I would like to pocket some of the equity myself to start investing a little. So basically I would say sale price 18000, 12000 to seller and 6kfor repairs. And in order to get some of the equity i would basically I have to get a second mortgage or heloc to do so.
bama,
You have to be living in the home in order to get a heloc or second mortgage. I thought it was your mother-in-law’s rental home?
furnishedowner
furnishedowner,
The way I read it, MIL is the renter who is being offered an opportunity to purchase from the owner. bamaflips wants to become the buyer and perhaps keep MIL as a renter.