creative seller financing - Posted by Dean

Posted by Brent_IL on May 24, 2002 at 01:58:39:


You?re making a retail offer on this house.

This would be too thin for me to put $10,000 down unless I had a solid T/B or R/B waiting in the wings with 5%+ option consideration, and I could make something on the spread. I?d have to be extremely confident in my buyer?s ability to perform. $8,000 is still too much for me on a deal this thin. Just because a seller will hold a second doesn?t make the deal profitable, or creative.

If the house is truly worth $210K, you should be able to exit at $235, as planned, by offering owner-financed/ no-bank-qualifying terms. However, understand this. Renting it out is exactly what you are doing, albeit at higher rent and with possibly lower expenses.

IMO, two years is not long enough for a T/B to be in a position to exercise. They won?t even have time to get the tax benefit of a full year?s interest. When the $16,000 comes due, you?re the one who will be writing a check.

I?ve had some small success in extending balloons by agreeing to increase the payments annually. I use a fully-amortized schedule with the monthly payments increasing by 2% in the third year, and increasing annually by 2% each year until the balloon comes due in 10 or 15 years. The interest rate stays the same so it all goes toward principal anyway, and it gives me time to go through a real estate cycle, or two.

She doesn?t appear to be all that motivated. Payments are current, she hasn?t bothered to list it, and she?s waiting for you to put only 5% down. I?d re-think the down payment in light of the reward/risk ratio. It seems like the seller is dictating the terms of the sale.

creative seller financing - Posted by Dean

Posted by Dean on May 24, 2002 at 24:58:36:

Hi, i’ve got a seller (are recently married and pregnant) own their own homes and 1 joint. the mr. has sold his, and the mrs. is looking at selling hers. I feel that she has some motivation. her house is worth approx 210-215k. she owes 188k on mortgage, is assumable, and open to creative financing… she expects at least 10k down payment. what would some of the experienced creonline members recommend for creative financing? (she is not interested in lease options). i am not really interested in renting it out, simply because it is a newer area and there are not alot of rentals to compare for proper rates…



Re: creative seller financing - Posted by dean

Posted by dean on May 24, 2002 at 01:16:20:

I am considering offering purchase price of $212k with possession 60 days away. $8k down payment, 16k as a balloon payment due in 2 yrs. then i could market as an owner finance/ no qualify for $235k. my question is: what should i do for an exit strategy with respect to the balloon?