Financing question-Illinois - Posted by james B.

Real Estate Investing
1

Posted by Brent_IL on January 09, 2003 at 23:22:07:

You are trying to force one SFH owner, who isn’t sufficiently motivated, to fit into the CREI mold. The majority of active creative real estate investors look for those who are already inclined to carry most of their equity in the form of seller-financing. They’re the ones that get offers.

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Financing question-Illinois - Posted by james B.

Posted by james B. on January 06, 2003 at 15:30:30:

I am a newbie. Please explain to me if I understand this correctly. Say there is a bldg. for sale for 100K. I as an investor find a bank who will only give me 75K. I then go to the owner and ask him to take a note for a 2nd mortgage for, say, 15K. Then I come up with 10K. My question is this: Would’nt this mean that the owner will only get a total of 85K at closing and then be owed by me 15K (which I will pay over 30yrs). Why would the owner do this. I mean, would’nt he want all his 100K right at closing??
jb

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Re: Financing question-Illinois - Posted by Bob

Posted by Bob on January 06, 2003 at 15:44:11:

There are many reasons a seller would take payments. Here are a few.

  1. He doesnt need the cash but could use a steady income.

  2. He would like to earn a high rate of return on his investment. With CD’s and money markets paying 2%, a 15% return looks awful attractive.

  3. He really wants to sell and will take what he can get.

Good luck.
Bob

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Re: Financing question-Illinois - Posted by james B.

Posted by james B. on January 09, 2003 at 24:53:51:

Is this how people get into properties with “nothing down”, by using seller financing as part or all of the deal? Let’s say the seller was not willing to take back a second mtg. but all I have is 10K to put down and the bank wants to give me only 75K for a property selling for 100K. This leaves me 15K short. If I get it from my credit cards, won’t my payment be high on the 15K (I may be wrong, but don’t credit card companies make the minimum payment 3% of the outstanding balance)? So on my example 3% of 15K is 450/month. This would make for a lot of negative cash flow situations wouldn’t it? Can I refinance soon after I get the 1rst mtg. for 75K to get a new loan at 90% of the value of the property, or 90K in this situation. That way my overall payment would be less than having a 75K loan plus the 450/month cc payment. Is it easier or harder to get a 90% loan as refinance rather than at the original purchase of the property?
james B.