Can This Deal Work? - Posted by RussSW

Posted by Brent_IL on January 16, 2002 at 12:59:54:

Sorry, I’m a ten-words-a-minute man, so I take short-cuts.

T/B = Tenant-Buyer. It refers to the optionee in a lease option who is renting the house.

R/B = Resident/Beneficiary. When a property is owned by a trust, the trustee will lease the house to someone who becomes a resident, and in this case, that one is also a beneficiary of the trust and will have the first-right-to-buy.

Can This Deal Work? - Posted by RussSW

Posted by RussSW on January 16, 2002 at 08:31:15:

I have a motivated seller, three months behind on his mortgage. She just wants out. House is clean in fine area of town. They move out and it’s ready for someone else to move in.
Their equity in this prop is about $25K: balance on existing note is about $140, and I estimate FMV at $165K.
Bringing them up to date requires about $5K, with next months payment looming on the horizon.
My preference is to get this house and turn it quick. But, I am not opposed to keeping it long term if the situation I describe is better suited to such.
How can I secure this deal with no, (or very little), cash and profit from it?

Re: Can This Deal Work? - Posted by Dan B.

Posted by Dan B. on January 16, 2002 at 16:19:15:

OOOPPPPPSSSS…posted my reply to the WRONG MESSAGE. Sorry

Re: Can This Deal Work? - Posted by Dan B.

Posted by Dan B. on January 16, 2002 at 16:16:47:

Well, I have to say that I have not seen this much tap dancing since Riverdance was on Broadway. I was really surprised by the lack of factual info in these replies, since this board does such an excellent job with most any other RE subject.

I am a new investor, and have not sold a house yet. Last year (2000 tax year, actually), I made $140K at corp job, and in July of 2001, got canned with all the other dot-bombs. I did not consider REI until about a month ago, and began to read, look at houses, and make offers. I would really like to know what the ramp up time is. I have already read all the posts about it taking work, depends on me, yadda yadda. Guess what, same with corp. America. But there, when you launch a new product or service, you look at actual numbers from competitors, partners, etc., just as we could here, if we were so inclined. You take these numbers, and you make assumptions about how they apply to your situation, and then make projections about what your business might do.

Sooo…On average, for people who began in the last two years, how much did they make in year one, and how much in year two. There will surely be a big spread, but it will help people understand. If NO ONE has achieved $140K by end of year two, then I know, in all likelihood, I won’t either. But if the range is $50K to $100K, and I need $90K to survive, then I know I have to be better at this than 80% of the other players (of course, assumes normal dist).

So, I think the question is, are the full time investors willing to put actual numbers up, so we can evaluate objectively, the earning patterns for new investors?

This can be done quite anonymously, as no one really needs to know your personal business.

Please comment.

Dan B.

Re: Or… - Posted by GregNY

Posted by GregNY on January 16, 2002 at 11:53:01:

Sandwich it!

You L/P for balance of $140K

L/O for around $170K or so
Get 3% to 5% O/C, that’s $5100 to $8500
Give yourself a decent monthly spread

Collect in a year, or start over in a year


Re: Can This Deal Work? - Posted by Bryan

Posted by Bryan on January 16, 2002 at 10:19:19:

Do you have the funds to bring this house current? If the answer is yes and everything else checks out, get the deed to the house first of all. Get the deed and get it recorded so you now have a stake in the property.

Will the rents in that area support the debt service? If so, you have all the options at your fingertips. You can sell for the cash out or you can rent it for a positive cash flow.

You offer to bring the house payments current if they will sign the house over to you. You are saving them from a foreclosure and saving their credit. They get no payment from you. As soon as they sign the house over to you, you record it and make good on the loan. The rest is gravy…you just got a fine home for $5K, congratulations. Let us know how this turns out for you.


Re: Can This Deal Work? - Posted by Brent_IL

Posted by Brent_IL on January 16, 2002 at 09:19:25:

Sign it up.

Advertise for a partner. “$7,500 buys $15,000 equity and 1/2 interest in $165K property. No Payments or bills.”

Bring the loan current, put in trust, and take over management duties so your new partner won’t have to. Put a R/B, or T/B in the house.

Your profit is $10K equity, 1/2 appreciation, and whatever you get from the tenant.

what does that mean Brent IL? - Posted by DAN

Posted by DAN on January 16, 2002 at 11:36:48:

What is R/B and T/B?
Good suggestion by the way!!

Dan Fletcher