Dave,
From what I can see, here is what you will probably happen.
1.More than likely you are going to run into what is called a jumbo loan or note situation. They are scrutinized a little more and may go into a full doc for approval.
2.Most all note buyers are going to want to see some down payment on a deal and one that large may have to be proofed and sourced.
If its Not going to be owner occupied probably the best LTV you are going to get is 80%.That will put your note amount at $274,640 then you have to discount that.
4.You may get a buy rate in the 95% or higher range with a note that large, but it will depend on your credit and what the note rate is set at. I have recently seen an increase in the note rates in the lower interest rate programs most of them are around 10% now and you would need to structure it at that rate to be able to obtain the highest buy rate on the note.
One last thing you may not find a note buyer that will work with you on that many non owner properties unless they are all deeded together.
Posted by Dave (IN) on August 28, 1999 at 14:49:49:
An ad in the local paper has a person selling five duplexes, which are all currently leased, for $69,900 each ($349,500 total). I have an idea based on the following assumptions:
Negotiated sales price: $300,000
Seller wants all cash at close
Appraisal supports a sales price of $343,300
Net operating income - mortgage payment = positive cash
flow
My plan:
I purchase the properties for $343,300, no money down. The owner agrees to carry a 100% mortgage for 30 years at 9.5%. I find a note buyer (such as one of the two I have seen mentioned on this newsgroup) who will purchase the mortgage at 90% (one buyer advertises 95%) and do a simultaneous closing. The note buyer pays my seller $308,970 for the mortgage. My seller uses the excess $8,970 to cover closing costs and any remainder would be passed on to me by the seller.
End result: I own the properties using none of my own money and the seller gets his $300,000 cash.
There must be some flaws here (probably a lot of them). The biggest that I could see is that perhaps a note buyer wouldn’t purchase a 100% seller-financed mortgage although this deal would give them a $34,000 equity position. So please pick this apart for me. If nothing else I will further my real estate education with your feedback.