This was the reply:
You might be better off creating a 1st mortgage for $165,000.00 or 66% LTV and selling that for cash at closing. If you got 92% of the note that would be 151,800.00 + 85k= 236,800.00 total. Take a look at www.sunvestinc.com or go to the notes forum and look up Mike Mongiello (at sunvest) He can help you structure this note to benefit you.
Good Luck,
Shawn(OH)
Let’s apply this to your situation. First, if you take a second, How secure is your position, or most important, how collectible will it be in a timely fashion? You never mentioned how much cash down the buyer has. Personally I would, rather than take a shaky second, (unless you are willing to take 59k and a pig in the poke for you property) Place an ad in the paper that says "Owner will finance, No Banks! 3Br 1Ba Home 123 Main St. Call xxx-xxxx. Your phone will ring off the hook. I would ask 80,000 for the property, create a 30yr 10% mortgage w 4000 down @ 667 per month and sell the note of 76000 at closing for 90% or so depending on the deal. That equals 68400 + 4000.00= 72400.00 Much better than 59k or even 65k.
I’m looking to sell a property for $65,000. The person interested in buying the property, because of poor credit history, is only able qualify for $59,000. A friend suggested that I hold a second for $6,000 payable in one year after which if he continues to pay on time for the period of one year he can refinance to pay me off. My question is that if I decide to follow that advice, what happens after the year is up and for some reason the buyer can’t refinance to pay me off? And should I record the note? The property appraised at $80,000.
Re: Is holding second adviseable? - Posted by Dave Swett-CA
Posted by Dave Swett-CA on December 16, 2002 at 21:12:56:
You’re not telling us your motivation to do the deal.
If the place appraises at $80k, why in the world are you selling at $65k–about 80% of the market. Jokingly you should be demanding a $21k note ($6k+$15k) to just make a sensible deal to yourself.
I would say consider yourself lucky that the buyer can’t qualify, but went thru the hoops to give you the free info that you have left $15k on the table and get out of this deal like right now.
It would be a bad financial transaction for you if he came up with that $6k cash to close this deal. He could turn around and flip it for $15k profit with a lease option or land contract and get his $6k back as option consideration and make $15k paper profit for a month’s work.
Newby Instead of selling him the property now and taking the risk of collecting why don’t you do a lease/option for 1 year with a non-refundable option consideration up front? This would keep the property in your name then if he does not pay well you could evict without having to go through a repossession. Just a suggestion. wpage