Creative Thinkers Needed (Experience) - Posted by Tom_IN

Posted by CurtNY on June 06, 2001 at 14:14:33:

Sounds like you already made the right offers. If she won’t lease option it, or sell subject to, I only see two alternatives 1. Pactrust (I’ve never used it myself, but I think it would work here, check out or 2. let her know your offers, and tell her you’ll check back in thirty days. Sounds like a possible future deal (if you can find profit), she just not motivated enough yet. Check back with her, making two payments will eat her up eventually. Good Luck.


Creative Thinkers Needed (Experience) - Posted by Tom_IN

Posted by Tom_IN on June 06, 2001 at 13:10:24:

I have been working with a woman who is selling her home herself. She is living in another state and has a friend here showing the house for her. It has been on the market since Dec 2000. She started out asking about 59,000. I went to look at it in March and her friend told me it was down to 56,000. When I called the owner 2 weeks later she was down to 53,000. I finally asked her what her payoff was and she told me 52,500. I had run my numbers and knew that this small 2 bedroom wouldn’t cash flow as a rental for me unless I could get it for 40,000. So, the most I would pay going the conventional bank financing route was 40,000.

I presented her with a lease option over the phone where I would lease it from her for her monthly payment amount that she still owed and I would have an option to buy at 53,000 in two years. She just replied that her mortgage contract didn’t allow for renting it out. Then I asked her if she was open to letting me take over her mortgage payments for her and I would pay her a small amount for her small equity position in the property. She had only lived there 2 years, so I know she doesn’t have much equity. Anyways, she immediately shot that down saying her mortgage contract didn’t allow it! She basically thinks cash payoff of her mortgage is her only option.

Now my lack of experience comes shining through. Should I (1) ask her what type of mortgage it is and who she makes her check out to every month, then call them and ask for the details regarding assuming or “subject to” OR (2) pay her every month and let her pay the original mortgage OR (3) forget it and move on to the next deal.

Let me finish by saying, she is making payments on this home while it sits empty and she is paying another payment where she moved to. I know for a fact she is desperate to get out from under this payment, but she definately is the type of person that lives to the letter of the law and if her contract says she cannot do something then “she’s not going to do it”.

For all of you with experience out there, do I have any other options than the 3 options mentioned above?



Re: Creative Thinkers Needed (Experience) - Posted by Bill Gatten

Posted by Bill Gatten on June 07, 2001 at 22:07:21:

Check my answer to “Mel” below. You may be on the edge of a reasonable deal here, if you proceed cautiously with it.

However, before you go any further, get a copy of her mortgage and look it over. The DOS Clause is not a problem (with the PACTrust), but it sort?a sounds like what we call a CHAFA loan here in Ca.: a government-backed, preferred low-rate affordable housing first-time homebuyer arrangement for resident owners only.

In these types of loans there is indeed a prohibition against renting or even leaving the property for any reason (and they really mean it). If the property is vacant, she has already broken her contract, so the rest is anti-climactic. Ust watch out, because these loans are regularly called due to violation of the occupancy provision.

Bill Gatten

Re: Creative Thinkers Needed (Experience) - Posted by Bud Branstetter

Posted by Bud Branstetter on June 07, 2001 at 21:55:44:

Unless it is one of these rural loans there should not be a problem with renting it out. I do many Pactrusts and can make the seller aware of the advantages. The longer you can structure it for the eaier it is to allow appreciation to overcome the over encumbered house. Whether this lady is aware of her options or wants to be aware is the question. Bill Gatten likes to talk to sellers. If she is anywhere near Indianapolis let me know.

Re: Creative Thinkers Needed (Experience) - Posted by Terry(IN)

Posted by Terry(IN) on June 06, 2001 at 16:47:02:


You definately need to know what the FMV is on this home. There may be enough spread to do a flip using owner financing. If you can determine that the FMV would be in the neighborhood of $65,000, then you could put together a deal that would net you a few thousand cash and a monthly income. If you need more info, email me.

BTW, where in Indiana are you located?


Re: Creative Thinkers Needed (Experience) - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 06, 2001 at 15:07:05:

Number 3: forget it and move on. You’re wasting your time with this unmotivated seller. Wish her luck, leave her your number and tell her she can call you if the situation changes. Then, check back in a month or two, when she may be more willing to consider alternatives. Also, you need to know what the home is worth based on sold comps. If it’s only worth $50k, it’s unlikely either a L/O or subject-to deal would make any sense.

Brian (NY)