OfflineI have a deal where the Seller bought the house in 1970 from his Mom for 1.00
He is asking 225,000 I guess you could say market value, it not in bad shape currently rented for 1400.00 per month with excellent tenants who really dont want to move.
He is willing to hold the Mortgage for 100,000.00 cash down. I dont have 100,000 cash so I am thinking how can I get into this deal without any money and turn this into a win win for both of us.
I have spoken to him in length and know he needs the cash right now to clear off some debt. This Seller also owns about 12 other properties as well. So I was thinking of just aksing him... maybe doing something like this.
Hello Milow:
I really did like your Rential Property, and I see it is still on the Market, it has bee about 4 Months since me and the other Investor looked at it. Once we realized there was very little Cashflow we felt it would not work for us.
But I still can not help but think there might be away we can both win with this one.
I currently dont have the funds in place to make the purchase. I am wondering if you are interested in doing something well... "Creative" you have a Rential Property and I want a Rential Property.
I am thinking maybe we could come up with some kind of solution where you can get your price and I can aquire the home in a no money down deal.
So lets say, the Home may very well end up sitting for another 6 months to a year for sale, even with the Creative Financing your offering people still can not get loans to buy a home in todays Banking Market. Lets face it the Banks dont need the money they just got 700 billion dollars they are still sitting on, and they are not going to wake up until its too late and homes are just sitting empty.
What would you say to letting me take over the place at a 200,000 price? you hold the mortgage at 5% for up to 10 to 18 Months giving me time to do a refinance on the loan and cashing you totally out of the deal.
You get to totally walk away, I get the property and manage the Rential Unit. Yes I know its kinda out there but it is away a lot of people in my and your position are using to find Buyers.
Take your time and let me know what you think.
So what do you Guys/Gals think do I have a chance is it even worth it?
With the low cashflow would I be able to manage it?
Thank you all imput good or bad is greatly appreciated.
Life is not about the storm thats brewing, its about Dancing in the Rain!
keep in mind most banks will only refi you up to 75% of fmv. I am not 100% sure on this number ,but look into it so you know what to offer the seller.
But I like your idea of no money down and refi in 3-6 months. You may find a bank that dont care about seasoning and refi right away.
good luck
Richie.
You shall receive. Or at least you never know what might happen if you just ask. If they say no then have a back up offer or two. Show them you're interested, you're motivated and you're willing to keep trying to find a win/win solution. That's all you can do, and it's better than doing nothing and wondering what if right?
All the best to you, let us know how you make out on this one.
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
I am thinking about going with the option of waiting it out, one of the Guys told me the seller is totally not motivated he is asking for 100K up front when banks are not even asking that much money to buy a home these days.
I realize he really is not motivated and maybe I better let it sit a while longer. I might make contact but not sure if I will offer him close to his price because the area is not the best it would be considered a C area, about 10 years ago it was totally drug infested, but it has come a long way, still not the best though.
Maybe after it sits on the market a while longer and he sees the realtor can not sell it for her 250,000 he will wake up.
for now I am going to wait it out and move on.
Life is not about the storm thats brewing, its about Dancing in the Rain!
The bank will most likey refi only up to 80% of appraised value at the time of the refi. Depending how the market moves in the next 18 months, you more than likely will have to come up with the remaining 20%. I would first work on securing the 20% before anything else.
Good Luck.
Time does motivate a seller, so given more time the seller may become more flexible. One intersting thing of the story is if the seller has 12 other proeprties is there another property that may work for you? In regards to this proeprty you wantto may sure the cash flow covers any and all debt obligations. If the rental buildign is in a "C" Area as you indicated will it be easy to rent the units and what is the average annual vacancy rate?
Another key is find out how much banks will currently loan on a refi. Some may offer 75% LTV while others may only go as high as 50% LTV. Also fidn out any seasonign requiremtns. A creative way for the current owner to get cash is do a refi himself and you cna then to a purchase lease option on the building. The owner gets his cash without paying the capital gain tax if he currently sells it. He has a low tax basis in the proeprty so a purchase lease option may be win-win for both. Remember a good deal is determined within the numbers and cash flow of the property not just because it might be a no money down deal. Good luck with this potential deal. Believe and Achieve!
- Joe
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There are other deals out there. I think you should walk away do not get emotionally involved, if the property doesn't cashflow it's time to look for a new deal. I like Joe's idea about asking about the sellers other properties.
"Choose to act wisely" I can't remember the author's name...
Maybe after sitting on it a while he will consider a subject 2
What is the FMV on this house? Does it need repairs? He does not sound very motivated if he is asking for $100k down. That's 44% down. Who puts 44% down on a house? Your goal should always be to put down as little as possible and make your end buyers put down the bigger chunk. Also, what are you going to do with the tenants? $1400/mos is not going to be a cash flowing property at $225k sale. If the guy isn't willing to negotiate you really don't have a deal. Is he still free and clear on the house? In today's market to do owner financing you should be at %75 LTV, so you can sell it to your end buyer for a profit. Good luck.
KimmyJ
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