Posted by chet on February 21, 2005 at 09:17:55:
to me the best out come (if you’re an agressive investor) he defaults on 1st, you by 2nd at a discould and cure defualt/ but 1s and continue w/ for forelcosure.
but geting monthly cash flow, I secured position and getting paid off in 12 -18 months would be find too.
commercial deal - Posted by bobby
Posted by bobby on February 19, 2005 at 16:39:26:
An owner of a commercial retail property apporoached me this week needing $20,000 cash ASAP he will sign the property over to me as collateral and buy it back within 1 yr. time. I have the money and want to do the deal, I just don’t know what to do. A purchase A land contract of some sort. A purchase agreement. ???
The upside is property valued at $550K and has a 1st and 2nd mortgage for a total of $300K, therefore a substantial equity stake if he defaults.
I have the common sense to hire a reputable law firm yet I don’t what I would ask them to do.
Thanks
Hopelessly about to be rich
Re: commercial deal - Posted by chet
Posted by chet on February 20, 2005 at 01:14:35:
so you’re going to be atleast 3rd in line to get paid if something goes bad. What other liens are there.
using something as collteral and signing over are two radically different things.
what interest rate is he going to pay?
is this just a 3rd “mortgage” w/ a ballon in 12 months?
good luck.
Re: commercial deal - Posted by bobby
Posted by bobby on February 20, 2005 at 14:08:42:
PS I had a title search performed indicating no other liens
Re: commercial deal - Posted by bobby
Posted by bobby on February 20, 2005 at 14:07:11:
He will sign over the property, I will lease back to him w/ option to purchase in 1 yr. He will basically do anything I ask (unique huh), yet I’m not sure what I really should be doing to both perfect my interest and to profit. Interest rate will be around 150% on the $20K.
Re: commercial deal - Posted by chet
Posted by chet on February 20, 2005 at 16:50:54:
Don’t for property tax which may be deliquent but no a lien yet.
for ROI, are you comfortable being in 3rd place?
Is the about your lending a big % of your investment $$ (e.g. if you loose 3%, it hurts but you survive, if you loose 90%, WOW!)
Re: commercial deal - Posted by chet
Posted by chet on February 20, 2005 at 16:55:54:
“Interest rate will be around 150%”… what are the usuary laws in your state?
This just sounds real fishy to me.
What happens if he takes your 20K an moves to Brazil (no extradition treaty) you own the land subject 2 the 2 mortgages ahead of you, and if the construction is only partially complete, it’s much more expenside to complete (needing to fix other peoples mistakes).
Just an FYI.
Re: commercial deal - Posted by bobby
Posted by bobby on February 20, 2005 at 20:20:31:
I’m somewhat optimistic. I met with the gentleman and he’s been in business for 20yrs at that location, the other tenant pays $1000 in rent. I haven’t checked prop tax and he says he’s current on payments, I did check the title. What about title insurance concerning any other liens? 3rd place, but what if i refinance it into my name and pay off the 300K mortgage? He’s the one sticking his neck out by essentially selling it to me for 20K and then I lease it back to him? Am i right? or it would take some time to finance and he wants the money now, could I purchase agreement him until I take over? If I own it and he goes to brazil he defaults on the lease and option to purchase back and I get 200K in equity, right?? The only thing I thought might be fishy is the appraised value of 550K, yet what bank would lend him 100% for 5yrs or so? Besides the appraisal looks legit. Usuarry laws? Don’t know anything about them. Thanks again.
Re: commercial deal - Posted by chet
Posted by chet on February 21, 2005 at 01:15:06:
you sounds pretty comfortable. I like to show people a bleak picture.
Usary is charging more than the legal interest rate.
Re: commercial deal - Posted by bobby
Posted by bobby on February 21, 2005 at 04:16:56:
I appreciate that, what would the best case scenerio be- deal structure, diligence, outcome, etc.