Could this be a deal? - Posted by Harry W

Posted by B.L.Renfrow on August 17, 1999 at 18:28:31:

Here are a couple of ideas. Bear in mind that if significant repairs are necessary that will need to be taken into account when looking at these numbers:

OPTION 1. Even at 65% FMV, it should be possible to find hard money at this LTV. You could offer $374k, purchase with a hard money loan, then flip it, retail it, whatever.

OPTION 2. Offer $374k with as long a period until closing as you can negotiate. Then, market the heck out of it, offering owner financing at $580k with 5-10% down. When you get a qualified buyer, create a note for 80% of $580k, or $464k. You should be able to find a buyer for at least 85-90% face value, if your buyer has decent credit. Carry back the remainder as a second. That would give you a nice bit of cash at closing, plus the income from the second.

OPTION 3. If the seller would allow the mortgage to remain in his name for a while, you could have him transfer title to a land trust, naming you a non-resident beneficiary. Then you locate a buyer who will move in, make the payments and obtain his own financing within an agreed-upon period of time, whereupon the seller’s mortgage is paid and you pay the seller the equity he has carried during the period and you take a share (?or all of) the appreciation and difference between the selling price and purchase price.

Please keep in mind that I’m no trust expert (still trying to understand them myself) so if you wish to pursue this route, you should obtain advice of someone more knowledgeable. Also, I’ve never worked with a property in this price range, so I’m not entirely sure how realistic any of the above are, though they work well in the lower price ranges. Depends too on the market in your area and number of high-income buyers available.

Brian (NY)

Could this be a deal? - Posted by Harry W

Posted by Harry W on August 17, 1999 at 17:27:30:

Upscale 3900 SF house with FMV $575k. Out of state owner just had tenants from H*x# removed and is $3800/mo out of pocket on loan balance of $ 374k. Repairs not estimated yet. Realtor says: Owner wants him to get him OUT! It’s out of my league and 374 is 65% of FMV. From what I have learned an all cash offer should be 50% and no more. At $564k it got no offers in 70 days on market. Any experienced investors’ ideas would be appreciated.