Posted by Redline on January 22, 1999 at 21:30:38:
Well, the thing is … you are technically correct. He bought properties that are now complete dogs and you could say “Well, that’s his problem”.
On the other hand, this could become the sellers problem because … if the properties aren’t worth much, he’s only going to make money on this deal if the buyer keeps paying. But if he can no longer continue to pay - well then now TWO people have problems, no?
So, in this case it may be in BOTH parties best interest to re-nogotiate a little. Maybe not. The seller might not mind taking back the properties if he’s included language to do so (which he should have).
This question is to the more experienced investors out there…I have 2 houses that are financed on owner contract , the same owner. One house has a post and pier foundation and the other is a 1979 manufactured home w/ no foundation. The person who holds the contract on these houses is charging me 10% interest. The payments are killing me and the rent does not currently cover the mortgage. I was wondering if anyone knows of any banks, mortgage companies or whoever out there who specializes in financing “special properties” at a better interest rate than the 10%? Thanks!
Looking at your financing 10% is not bad, you probably got into them NO MONEY DOWN or very little… Right?
Why not look at selling them on contract yourself!!! Offer them owner financing low down take back a note at 11% Interest then at least you are making 1% on his money.
Pat
Your local lenders will finance based on appraised value and your income and credit rating. Will these properties stand up to what you need to pay off the contracts?
Suggestion: Review the contract’s default language. Does seller have the right to a personal judgment if you default? If not, then the approach might be to tell the seller he either negotiates better terms, or these “dogs” will find a new home - his.
I’m a new guy, but this is the first thing I’ve read on this board that I have a real problem with.
There is no indication that the original seller in any way misrepresented himself - yet you see the solution to the problem as purposefully defaulting on the loan?
Seems to me if you sign an obligation, you sign an obligation. If default is the only way to stay out of bankruptcy - OK, maybe. I guess it depends on what the author means by ‘killing me.’
But to default to save a few bucks a month on one’s own mistake seems like a unethical way to go. I’m not sure I can subscribe to that.
If the contract says that the seller’s only remedy in the event of default is to take the property back and cancel the contract, it can be presumed that this remedy fully compensates the seller, or he wouldn’t have agreed to it. Therefore, the contract, impliedly or in fact, gives the buyer, the option to complete the purchase OR surrender the poperty back. If the seller didn’t intend that result then he made a mistake - the same way the buyer made a mistake by agreeing to pay more than the property was worth. Mutual mistake - renegotiate. Anyway, that’s one way to look at it.
If this thinking runs contrary to your personal moral code, then don’t do it.