I Need help with a Land Contract offer. - Posted by LeonNC

Real Estate Investing
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Posted by WilliamGA on April 07, 2000 at 21:33:58:

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I Need help with a Land Contract offer. - Posted by LeonNC

Posted by LeonNC on April 07, 2000 at 12:40:57:

I had a guy call me who was ready and willing over the phone to lease option his house to me. Somehow he bought a very expensive house from the bank and I guess he’s tired of having the privelidge of being a landlord and the tenant is moving out. He’s willing to sell either, maybe both. The one I’m looking at is the one he’s living in. The other is a 250k house that we will probably talk about when I see him (maybe a lease option assignment). Right now I want to try something on his residence.

I offered to lease option the house (I’ll give you the numbers I have) but now I’m thinking it might be better to buy it on a land contract and resell on a land contract. I don’t think there will be much if any positive cashflow on a lease because $1100 is too close to fair market rent. And, I figure maybe I can get his sale price down if I offer to buy it.

I haven’t got the comps yet but he said the house should be worth $130,000. He’s asking $125,000 and I believe his payoff is not much less based on the payment. He has a first and second I don’t know the amounts. His payment PITI is $1100 mo.

I figure I could sell the house on a land contract for $135k to $140k at maybe 11 or 12 percent. I’m not sure how I would structure MY OFFER TO THE BUYER.

  1. If I pay him his $1100 mo. how is this stuctured? Is this an interest only payment with say a two year balloon?

  2. If he has no equity should I give him anything down? I’ll obviously start with Zero down but if he wants something I guess I could offer him 1 or 2k upon resale of the house. I’ll try to get 3 months until my first payment.

What offers would you make if any?

Hope you can help! Thanks.

LeonNC

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Re: I Need help with a Land Contract offer. - Posted by Paul_NY

Posted by Paul_NY on April 08, 2000 at 01:02:02:

1st: Your payments to him should be equal to what he pays the banks. If he owes a 1st mtg payment of $600 for 22 years at 8% and a 2nd mtg of $500 for 14 years at 10%, then structure your land contract identical to his. In essence, you’re paying his debt.

Then make a different one to the new buyer.