Posted by jw on April 13, 2004 at 06:40:31:
Thanks for the idea. Ok say they refi how would they sell the house to cfd with the new refi?
HELP! MORE IDEAS PLEASE! I WOULD LIKE TO EXPEDITE THIS SALE ASAP. Thanks in advance.
how can i buy this house - Posted by jw
Posted by jw on April 12, 2004 at 24:43:05:
I have some questions on purchasing a home via contract for deed.
This is the senario,please excuse the length:
I’m a new investor that has not completed my first successful deal yet,
but I currently need a home for my family and myself. I have found a home that is exactly what I need and I am using the contract for deed method to purchase, but the owners have certain concerns.
I cannot qualify traditionally hence the cfd route, but should be able to in 12-24 months, I have or can get only $1500 right away for a downpayment.
I have submitted an offer to the owners to purchase their rental property at their asking price as long as we can agree on terms. This is usually ok all things considered, and they are flexible and considering my offer but there are some key issues I need to resolve to make this work.
#1. The owners want to purchase a condo in an oceanside town(they havent yet selected any of course) and do an exchange (to escape the capital gains tax, this is understandable but therefore I would need upfront cash)
#2. They are currently renting the two units on the property and have a positive cash flow, but the leases are about to end.So if they cant get a reasonable selling offer they are not pressed to sell or can put off their condo purchase temporarily and not be hurting.(just continue renting)
#3. They have an existing equity loan (mortgage)on the property which the rents are servicing of course.
#4. They are concerned about me not fulfilling our contract (if we do this).If I do a cfd, isnt holding the deed very good security or sufficient security for the owners?
OK, those are the immediate and main concerns. Now for some numbers.
Dont freak out the numbers are a little high but the property is pretty much worth it.
property value= 350-400k asking=429k
existing loan=170k
rents=about 2100/mo-combined;are two units on the property
my dwnpymt=1500
cfd terms= 24/mo @ 2k with balloon refi at end for principal balance(this would be about 380k)
this equals 1500+48000+balloon=447k total
my strategy is to offer them above the asking price, this is a very good deal for all involved if I can resolve these issues.
It would be greatly appreciated if anyone has any ideas on how i can;
*Help the owners get their condo and I get the house and,
*Service or eliminate the underlying mortgage, and to
*Make the owners comfortable in going through with this type deal or more secure in dealing with me(a credit check wouldnt help me any, its not totally bad but needs some work which Im taking care of currently).
According to the wife,so far this has been the best offer they have received short of a straight buyout. After reviewing my offer they did call me back to confirm my appt. to see the property and discuss this proposal further.(I needed to view the inside, I did a driveby and got comps previously)
Im sick of renting, this home fits my needs exactly(it has an inlaw attachment), I really need to get into a home and realize that I can do this without bothering with realtors or traditional lenders initially. This is actually better than a L/O if it works.
All help is welcome and I really look forward to investing. Thanks in advance to all.
Re: how can i buy this house - Posted by Randy (SD)
Posted by Randy (SD) on April 12, 2004 at 10:52:30:
Your numbers are a little skewed, in part of your calculation for the total purchase price you’re applying $48,000 (2 years payments on CFD) as part of your purchase price-that is not accurate as they have the debt service and the value of time and money. You’re proposing .03% down payment and an extremely low rate of return on the CFD. Purchase price is $429,000 minus $1500 down payment = $427,500 balance @ 5% interest payment = $2294.91. This is the debt service only, I see no calculation for real estate taxes, insurance, maintenance and upkeep which on a contract for deed you are liable for. IMHO you need to take a hard look at your numbers.
Re: how can i buy this house - Posted by jw
Posted by jw on April 12, 2004 at 18:00:45:
Thx for your response Randy,I already had alot of info to put out there so some of it was left off.
The taxes, insurance, maintenance,and upkeep are all in addition to the 2k/mo(this is explained in the initial offer to the owner). The current mortgage is about $1200-$1300 on the 170k, so there is some leeway. This offer of course is negotiable. If you could please give some further suggestions on how I might purchase the house with the cfd method or any other method that might work would be greatly appreciated. As I said previously the owners are interested, and I would like to keep that interest up.
Also, how can they take advantage of the remaining equity in the house now( about 230k), and make some kind of arrangement on the existing loan(PITI)also? This would allow them to make their other real estate purchase and still sell the house right? Just throwing ideas around. Sound like anything worth persuing?
Owner’s equity - they could refi it - Posted by GP in WA
Posted by GP in WA on April 13, 2004 at 01:21:39:
The owners could refi it, pulling out the $ they need for their condo, and then sell it to you on the CFD.