Re: any way to buy this house? - Posted by Jeremy Burgess
Posted by Jeremy Burgess on July 04, 2008 at 10:58:29:
A couple of things.
What can you comfortable afford? Even if you stole this house for $300,000, a 30 year fixed at 6.5% will cost you $1900 a month and that does not include insurance and taxes. Even if you bought the house for $250,000 your payment would be $1600 a month. So, I think you need to be more realistic when you are compareing your really low rent to what the actual cost would be if you got a great deal on the house.
That being said, I will assume that you would prefer some sort of owner financing. Sellers have specific reasons for even contemplating a create offer. Usually it involves cash flow. The reason your landlord would rent to you for less than his payment indicates that he just wants most of his payment covered. It seems highly likely, especially since he hasn’t been able to sell it, that he would be receptive to your offer.
That being said, your offer needs to take into consideration his needs. Believe it or not, he doesn’t care about what you want. He wants his problem solved. If you take this approach and actually figure out what he needs, then solve it, you should be good.
While a lease option could work, it looks like he owes more than the house is currently worth. If you persued a lease option, you would want to make it a long one. This would give you time to build up a down payment with part of your rent going towards to the option price. This will also build in some equity for you. It will also give the market time to recover and turn around, which it will, and then more equity will be built in for you. More than likely, you will have to raise your monthly payments to cover all his cost and a little extra every month so he can profit. This is why investors invest in real estate, to profit. Remember that.
Here is my prefered method to do seller financed deals that have no equity. Get the deed and take over his payments. This is referred to as SUB TO deals. He will sign over the deed to you, so you actually own it, in exchange for debt relief and maybe something a little extra. I love this technique but you need to be a little realistic. Why would he do this? What could you do to sweeten the pot? Here is what I would pitch for such a large risk on his part. Offer to put down $10,000 and to take over his monthly pauments in exchange for him deeding you the house. Your $10,000 is a large commitment which may make him feel more comfortable taking such a large risk. Then he will get debt relief, a little money in his pocket, and no more worries.
Couple of things to watch out for:
Sounds like he may have one of those arm loans. Figure out what kind of loan he has and make sure it is current as well. Make sure you do a title search and for petes sake have a formal closing and get title insurance. This will protect you from many nightmares and yes it will cost some money but it is money well spent.
As to your reference about not being committed to a mortgage, do you want to be a renter all of your life? Renters build no wealth for themselves, they build it for their landlords. Figure out which side of the equation you want to be on. Real estate is a long term investment and the single best way to build wealth in the world. The best to you and your family. Feel free to ask me any questions you may have.
Jeremy Burgess
www.WholesaleMi.com
www.DetroitInvestmentSecrets.com
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