Signed Purchase Agreement / Funds Needed

Financing, Hard Money Lenders, Private Money
1

12/18/2009

Heres whats up. Tonight my wife and I signed a purchase agreement
(which is assumable) on a short sale. Bid: 125K / Owed: 163K /
Value 163-170K) We caught the property in pre-foreclosure and the
bid should go through. We plan to lease-option the home back from
an investor who funds deal. The property is in Mentor, OH (Outside Cleveland, OH) and is simply a solid deal. The few investors we have spoken with - we simply do not feel comfortable with. We need a verification of funds on Monday. Plus, we still need to find an investor to fund deal. Any Suggestions?

David Helmick

Thanks

2

david,

you are going to have a hard time finding an investor to fund this loan. the ltv is 76% which wil scare away any HML’s as well. why would you put a contract on a house without already having financing in place?

3

Hey Chris:

Thanks for reply…Why would I sign purchase agreement without funding? Not sure how to respond…Why would I not want to purchase a property at 75% of its value? This is a 1700 sq foot home in a mid to upper class location with a man made lake in the back yard. We have 2 children who will truely enjoy this home. We are asking a bank to accept $40,000 less than owed…and we are offering $70,000 in order to use $125,000. Are you saying that you make a $70,000 profit everytime you loan $125,000? …I would cerainly like to know of how you do that…Do you have a current investment with this profit potential?

Thanks
David

12/27/2009

Investment Opportunity: (Backed by real estate)

We will pay $70,000 for the use of $125,000.

We are completely open and flexible on the actual agreement and encourage creative thinking, EXCEPT for the following:

We have $2000 to put down
$1000/month loan payment
$200/month taxes/insurance

The $125,000 will be used to purchase Real Estate. (75 LTV)
Comp Value is roughly 168K ($165K owed to bank - Current / In Pre-Foreclosure)
Signed Purchase Agreement 12/8/2009 - (Assumable)

Risk Minimal for many reason(s)…here are two:

Borrower has a solid verifiable history of paying Lease/Rent each month, has been at place of employment for 25 years and will gross 57,000 in 2009. (Little to no debt)

The Loan is backed by real property in a solid (mid to upper class) area about 20 miles from Cleveland, OH. We are a family of 4, who will both live in and repair the home while doing so - at the permission of investor. An allowance of 5 years will be given for loan to come due, with an additional $10,000 pay out to investor, based on purchase price. ($135,000)

The above statements are just bullets on which the foundation of this transaction is to be based, in other words, Rent history is all we will be presenting. The 5 years needed before repayment is for rebuilding credit and updating home.

If a requirement of more money down or a decision based on complete credit history is required, then clearly this deal is not for you. We feel paying one $70,000 for the use of $125,000 backed by real estate worth $40,000 more than loan, along with a borrower with a 25 year job history allows this deal to be both secure and low risk.

Interested Parties Only Please:

David Helmick

We look forward to productive discussions…and only ask for both respect and trust and we will respond the same.

Modified due to rules violation

4

Hi David,

          I can see by your posting your inexperienced and have very little concept of risk or cash on cash returns!

Your proposal does not give an investor anything close to reasonable loan to value to put up this kind of money!

Private money lenders may consider making your loan but probable would not loan more than 50 to 60% and probable want 5 to 10 points and probable 12 to 15% interest per year.

What you propose is less than 10% returns, high loan to value for a no-doc loan and you have no risk in the property.

Go out and lease option a property, fix it up and re-sell it before your option period expires!!!

As an investor I want more money for returns than say a fund or annuity. Private money lenders generally loan money coming from pension funds or other pools of money.

Good luck,

                            GR
5

Hey GR:

Yearly return as deal sits is 11.2% …Anyway, thanks for response. Again, I opened with the foundation of an opportunity. If an investor wanted a cross lien…or even lien a retirement fund…how is this high risk? A purchase price adjustment…would allow annual return to increase easily to 12-15%. Plus, in looking at 3-4 houses every weekend … I could fulfil the need of an investor by matching his profile(s)…does this carry no value? I respect your experience and my lack of…what more do you (or an investor) want for a return?

Thanks

david

6

David,

So you think you are doing an investor a favor by paying them $1000 a month to rent THEIR rental property plus you will pay them 10K after 5 years? Try these numbers on for size. Investor has to put down at least 20% to purchase the property. So their loan amount will be for 100K. Their principle and interest will be $560 per month. Leaving them a profit of $440.00 per month or $5280 per year. That is a decent rate of return for a money market account, but not for a HIGH RISK real estate deal (100% LTV No Doc Loan). The 10K at the end will bring up the rate of return a bit but not till the very end. A no doc 125K loan is a thing of the past. You might try and bird dog this property to an investor, but at 76% it looks like a dog that won’t hunt to me.

So when you ask if I get this this type of return on my investments I would say yes.