Posted by Houserookie on December 13, 2000 at 16:46:15:
Before I spend anytime with a buyer, I make sure I know where he stands credit wise.
Then I strucutre an owner financed note and flip to my investor. I have an investor that will buy the notes at about 1% discount.
Houserookie
desperate seller called… - Posted by vladimir_Chicago
Posted by vladimir_Chicago on December 13, 2000 at 13:38:43:
responding to one of my newspaper ads, which, I guess, work a little better than bandit signs, covered under 6-8in of snow…
Seller has a 3br (possibly 4) and 1Bathroom (may be a 2 ba) in a suburb which is not very desirable, however, this seler has a house in an area of the suburb where most of police officers live.
Seller is now 4 months out of work and is MOTIVATED to sell. House is appraised 2mo ago at about 139K, seller has outstanding loan ballance of 105K, with 8K pre-payment penalty.
My plans-
Meet with seller tomorrow and set a selling price (subject-to) at 125K (I also want to help this guy, that is why I am willing to give this guy something for his equity). Will tie the property PRIOR to doing steps below.
Research title (with an attorney) and make sure that seller told me correct information about his loan. I believe seller has about $1400 in back taxes and hopefully there are no surprises after title search results…
Place the title into a landtrust, with myself as trustee and assign beneficial interest to me- (I will use Bronchick’s Cash Cow course materials). Questions about this step–What is the cheapest way to do this step with notarizations, etc…?
Make EVERY mortgage brocker aware of the fact that I have a house which I will rent to own with a purchase price of $150K, due in a year. I will require minimum $7K non-refundable option money, $1500/mo, with $60 of each timely monthly payment going towars the option money.
I am looking for any advise on how I can may be sturture this deal even better and cheaper for me. How much should I expect to pay for upfront? Did I miss any steps?
Thanks to all for your help and support.
Vladimir_Chicago
trusts - Posted by B.L.Renfrow
Posted by B.L.Renfrow on December 13, 2000 at 23:14:24:
Although you CAN be both the beneficiary and the trustee, it negates the anonymity advantage of using the land trust. Actually, your seller is the beneficiary when the trust is initially set up…until he transfers beneficial interest to you. It’s always a good move to use a trustee who cannot be easily located by potential judgment creditors or snoops. So you should preferably use an out-of-state associate, relative, friend, corporation, etc. with a different name than your own.
Brian (NY)
Re: desperate seller called… - Posted by dewCO
Posted by dewCO on December 13, 2000 at 15:03:34:
JP is right of course. Don’t give anymore than you have to. And delaying giving whatever you negotiate for as long as possible, as in, $500 to move now and another $1,000 when I get a tenant in (and use the tenants up front money to pay it out).
Also check, but don’t believe you can or should be both the trustee AND beneficiary. You need a trustee you can trust and have seller use that trustee, the seller becomes the bene and then assigns it to you I believe.
Re: desperate seller called… - Posted by JPiper
Posted by JPiper on December 13, 2000 at 13:58:12:
Can’t figure out why you would pay $125K…that rapidly turns this into no deal at all.
I’d take the loan over subject to…pay any back payments/taxes, give him a little moving money perhaps. That’s about it.
JPiper
Re: desperate seller called… - Posted by Houserookie
Posted by Houserookie on December 13, 2000 at 13:52:30:
NOtifying local brokers is a good idea.
Have you consider other options such as
placing into trust and then selling on owner financing contract. Flip the contract for profit.
My experience is, owner financed ads bring in a lot more buyers. Whehter you end up using it or not.
Often time I get people that want to rent.
Houserookie
Re: desperate seller called… - Posted by vladimir_chicago
Posted by vladimir_chicago on December 13, 2000 at 14:15:08:
I am trying to prolong paying anything, because I am not sure how quick I can get this house moving, especially with the holidays approaching.
In addition, since I have NEVER done this before, how can I estimate the required fix-up costs, etc.? What would you do and what kind of people would you have helping you if you were me?
Thanks,
Vladimir
Re: desperate seller called… - Posted by Matt
Posted by Matt on December 16, 2000 at 08:12:33:
Dear Houserookie,
I have 2 questions for you. 1) What does your owner financing ad say (or other ads you use) and 2) When you owner finance, do you have a standard contract or do you use a lawyer? If you have a standard contract could you please share it with me or tell me how to get one? Thanks in advance for any advice you can provide.
Matt-OH
I do not know… - Posted by vladimir_chicago
Posted by vladimir_chicago on December 13, 2000 at 14:32:07:
what kind of people I will get on an owner financed deal, though I am sure it will not hurt to try.
Also, remember that I will have to pay $125K (though I will take JPiper’s advice (above) and will try not to offer anything more than back pmts and proably moving exp.) to the seller and I am not sure what kind of discount I will have to take if I sell my note to mtg. brokers.
Thanks,
Vladimir
Re: desperate seller called… - Posted by al
Posted by al on December 16, 2000 at 10:37:09:
Vladimir,
If you are worried about moving the house quickly, email me at: alandavid@ureach.com
I have two t/b’s in the western burbs of Il. and no more houses to l/o.
al
Re: desperate seller called… - Posted by JPiper
Posted by JPiper on December 13, 2000 at 14:38:16:
I didn’t necessarily say “pay” something now…I said agree to pay. Here’s the difference: Back taxes need to be paid…but chances are you can pay them out of the new buyer’s money. In your original post you did not indicate that there are back payments, but if there are these “may” be able to be paid out of the new buyer’s money as well, depending on whether the lender has initiated foreclosure and where the foreclosure stands in terms of time. These are things you should know by now after your telephone conversation.
You also didn’t mention repairs in the initial post. But depending on what these are, you may be able to move the property without doing the repairs…it would depend on what they are. Most people as an example aren’t too concerned about paint if they can get into a property “non-qualifying”.
All in all, you need more information if you don’t know where the loan stands and you don’t have repair information.
As far as estimating repairs, my suggestion would be to tie the property up as indicated above, subject to an inspection and subject to verification of the loan information (assuming you can tie it up for perhaps just moving costs by taking over the loan).
Now you have a way to back out of the deal. You may be able to get a contractor over there once the deal is under contract to take a look and give you an estimate. I would also suggest that you acquire “Home Repair and Remodel Cost Guide” by Marshall and Swift. It’s probably available on Amazon.com. This will give you estimates on most of the things that you will be confronted with…although the estimates are high and I would never dream of paying these prices. Nevertheless, it will at least give you a clue. I would also spend some time at Home Depot looking at the cost of the things. A good rule of thumb is that labor is about 2 1/2 times the cost of materials and parts…on average. Just a rule of thumb though, a way to try to get in the ballpark.
Finally, because you are limited in cash or you’re worried about the time of year doesn’t mean you should raise your offer to $125K. That would be a reason NOT to do that.
JPiper
Re: desperate seller called… - Posted by Houserookie
Posted by Houserookie on December 16, 2000 at 09:29:49:
I spend more time updating and finding investors to buy contracts than I do in paperwork. In the past, I used attorneys. I quickly learned that they were doing the same thing over and over. The title company does most of the work now. In my experience, I think the less time you focus on paperwork, the more money you will make. Let qualified people do thier jobs.
I close about 3-5 deals every two weeks. Sometimes I go a whole month with just 3-5.
Average profit $6000. On some deals, I leave the profit, and take a second mortgage @ 13% for 30 years.
Here are some ads:
“Home For Sale. Owner will finance. Little down. 999999”
“Beautiful 2-3 bedrooms. NO banks needed. 9999999”
“Homes For Sale. First Month Free. No Banks Needed.
999999.”
Yes, I do make their first month payment for them. And why not…
Re: I do not know… - Posted by Brent_IL
Posted by Brent_IL on December 13, 2000 at 16:00:33:
You cannot count on selling your buyer’s note at all. You don’t know buyer’s situation, no seasoning, etc. (review financing board). Develop alternative exit.