Posted by DJ Busch on November 14, 1998 at 23:26:28:
John,
It looks like you’re in a pretty favorable position with this property. Here’s the way I would look at it…
You’re into it for about $42K…and it’s worth about $75K. That’s $33K in equity staring you in the face. So what to do? Get a home equity loan. With that much equity, just about any lender would probably jump at the chance to lend you $42K on it. This consolidates your bills into one, and a lower one, I’m guessing.
So now that you’ve got that single payment, you need to get it paid every month, right? Okay. Now would be a good time to look into Lease Optioning the property. I realize you would rather hold on to it, but chances are your renter won’t excercise his/her option, and you’ll have made the money anyway. Even if the option is excercised, you still win. In the meanwhile, for the next few years, you’re making a monthly positive cash flow and you’re not bothered with management hassles. This way, you’re free to go out and find more deals, and all the while the money keeps finding its way to your mailbox.
Posted by John OH on November 14, 1998 at 22:34:00:
I need some good ideas on what to do with a property.
I bought it for the mortgage balance of 27K at 10%. Put abot 15K in renovations - it’s in great shape now. I’ve been trying to sell it for 75K, but the market is slow here now.
The goal is to pay off the renovation debt and some other debts. That’s really the only reason to sell it now. I wouldn’t mind keeping it as a rental if I could figure out how to pay off some of that debt with the equity.
Could I create a note for eighty percent of the value and sell it? Any other ways? Thanks again.
Posted by charles DE on November 15, 1998 at 15:16:06:
Ditto what DJ said. I had 65K in a house appraised for $100K. I lease optioned it to a couple I found thru my newspaper ad for $775 a month for 3 year lease. They pay $100 a month lease option fee which goes towards the sale price of $89K. I financed the house with a 65% cash out and got my 65K back out. My monthly including taxes and insurance is $550. So I will be paying down the debt and getting cashflow plus if they buy it I will make 20K plus without a realtor’s fee.
ADVICE! I did not get a $1000 to $2000 non-refundable lease option upfront which many do now. I just got the security deposit upfront like a rental. Try to get that fee if possible to pay for your finance charges.
Re: I need some good ideas - Posted by phil fernandez
Posted by phil fernandez on November 15, 1998 at 07:00:59:
John,
Why not refinance the house for 80% 0f it’s value. If it’s fair market value is $75,000, you should be able to pull $60,000 out, pay off the $42,000 you’ve got into it and pocket the remaining $18,000 for future deals.
As long as the house will cash flow with the new $60,000 mortgage, it could be a good rental.
