Re: How can I buy these properties? HELP! - Posted by Harvey Carroll, Jr.
Posted by Harvey Carroll, Jr. on November 03, 1998 at 18:42:15:
I would be extreemlly leary of this deal and not be presheured by anyone. Keep in mind that 20% of 400,000 is $80,000. This is a lot of money for the seller. Probably the interest rate he intends to charge is much higher than that of a local bank, CD or bond. I would try to get him to discount the property compared to the appraisal. If the appraisal is for 400,000 offer 15 to 20% less. This would reduce the price by 60,000 if 15% is droped. Surely this will meet the loan to value for the bank and the seller will still get 68,000 2nd owner finance. All of this is hypothetical, because I would look at the cashflows and do extensive financial analysis and ensure that the principal, interest, tax and insurance is paid along with all the opperating cost. I hope you have enough experience to do the analysis, if not get a professional to help, such as a broker, cpa, or a lawyer. I would also be a bit leary about putting all the properties under one mortgage agreeement. I would structure them seperate, because you may want to trade and or sell one or two of them and use the profit if any to buy down the loans on the others. I do deals like this but I use raw land; buy at farm cost and rezone commercially. This increases the value. Your deal requires percision financial analysis.