Posted by AnnaSalk on January 14, 2001 at 09:01:34:
As B.Gatten would say: YEAH! WINNER! WINNER! DING! DING! And as your Teacher Of The Year Award have my very first business card with my face in it: catskillangler.com/nyhomes.htm Not too many privileged, like yourself, know that AnnaSalk is a.k.a. Joanne. B.Gatten for example thinks that AnnaSalk has a pink labster suit and reading glasses while Joanne is a regular Jo. Go to cal-equity.com & see for yourself :^)
motivated seller needs a Doctor of Solutions - Posted by AnnaSalk
Posted by AnnaSalk on January 11, 2001 at 18:40:22:
I just finished reading the posts on the main forum in re to George from Raleigh questions (about solving problems) - when my phone rung. The caller is answering my “I Buy Houses” ad from a year ago, very motivated to solve his particular problem… I wonder if anyone could help:
The house has a value of approx. $150K. Two mortgages total to 105K (70first + 35second) with total per month approx. 1,400 - he the owner, with fixed income cannot handle it. Cannot refinance because of credit problems. He would like to:
-Stay in the hse for another 2 years.
-As a resident pay no more than $1000 per mo + utilities and upkeep.
-Equity is not the priority at this point.
I would really appreciate some ideas. Even if I personally could not profit here I would like to be able to call him back with some decent news. Thanks in advance.
Re: motivated seller needs a Doctor of Solutions - Posted by JohnBoy
Posted by JohnBoy on January 14, 2001 at 02:16:21:
The problem here is with the seller wanting to stay in the house. After a year or two the seller decides to change their tune and thinks they should be entitled to the equity in the home. You are the owner, but you leased it back to the seller because he was in financial trouble. He decides to fight this in court and claims you were taking advantage of him while he was down. The court could reclassify your deal as a loan and cause you all kinds of problems. You don’t need any problems!
Find the seller another house to move into that he can afford! Take his house over “subject to” the existing mortgages. Then you sell the house on a wrap to another buyer on contract for deed.
Use the downpayment money from your new buyer to place the seller into another house if you have to!
Is the seller current on all his payments with both mortgages? If not, how many payments is he behind on each one?
Another way to do this like Ed was saying is IF you could find a lender that would refinance you after you take title to the property. Once you took title as the owner you refinance the property at 80% LTV. If the property appraises for $150k, this will get you $120k as a new first and pay off the two underlying loans, leaving you with $15k minus costs for refinancing. That money would cover the difference you need to carry the seller for two years while he rented at $1000.
I just don’t like renting back to a seller that is distessed and have to worry about dealing with any potential problems later should the seller change their tune and think they are entitled to something more later on! If you went this route, I would only agree to this by leasing the property to someone other than the seller, giving that tenant the right to sublease where they were renting to the seller and not you! Keep it at arms length as far as possible. The seller could use a relative or a friend to step in and sign a lease with you in place of the seller and they rent the house back to the seller by subleasing it to him!
Re: motivated seller needs a Doctor of Solutions - Posted by Ed Garcia
Posted by Ed Garcia on January 12, 2001 at 09:43:13:
Anna,
You don’t give us the payment break down for each loan. You also don’t tell us what rents are in the area for this type of house. My obvious opinion would be for him to sell the property to you or who ever want to do the deal, on a wrap around. You, or who ever is going to do the deal, lease him back the property for $1000 a month for 2 years. The new buyer is losing $400 a month for 1 year, which totals $4,800. The reason I say 1 year is because after a year, the new buyer can have the house reappraised, and refinance it. The new buyer can write off the loss, get a new loan, and lets say rates go up to 7.75%. The buyer can refinance the 105,000 + loan cost of $4,000 and have a payment of $780.44. Taxes& Ins. approximately another $125 totaling $905.44 per month…
Anna, there many other ways to play with this deal, this is just one to jump start your thinking.
Ed Garcia
You are a genius JohnBoy. You gave me direction! - Posted by AnnaSalk
Posted by AnnaSalk on January 14, 2001 at 07:03:56:
You are a genius and a great teacher JohnBoy. You gave me direction not for the first time! If half of your talent came from Nuts & Bolts of Creative Real Estate Transactions, I will have to afford it next time I have some money!
Owner suggests ref. 2nd only - IS THIS POSSIBLE? - Posted by AnnaSalk
Posted by AnnaSalk on January 13, 2001 at 12:59:13:
Mr. Garcia, please forgive me my lack of experience/foresight. I really would like to be able to find a solution for this person’s circumstances. And, possibly learn and profit myself at the same time.
I understand in general what you explained. Still, you did say that you gave me one sample out of perhaps a few other that are also pssible.
Before I ask my new question about this particular scenario I would like you to know that I understand the basic idea of wraps but I don’t understand the process in detail.
The owner called me again. My question is whether his latest suggestion is doable, and if so, would it require up front money or just credit from whoever would want to get involved: He would like the Buyer to refinance his second mortgage only and keep the first (good rates) (on a “wrap”?) for another two years or so, until the close of escrow. Is this something that could be done?
Re: motivated seller needs a Doctor of Solutions - Posted by AnnaSalk
Posted by AnnaSalk on January 12, 2001 at 14:04:20:
Thank you! I don’t know the breakdown for each loan yet. The rent could be just about right (1,400). But it would not be easy to find a tenant. Wrap seems OK if I had the investor who would not see renting/leasing as a problem. This is why I thought of PACTrust. Yet, if I wanted to go with the PACTrust there again I would be facing two possiblilities. One of them seems most atractive since it would allow the “investor” come in without money out of his/her pocket, just credit. Yet, again, comming in without aything up front would ONLY be possible if there are lenders out there willing to secure a loan using benefitial interest rather than a house? Do you know of such lenders? (I have a feeling that I am a bird thinking like a ground hog?..I have no idea why my wings are so heavy now…)
Hey John! - Posted by AnnaSalk
Posted by AnnaSalk on January 14, 2001 at 07:33:03:
Your student, George from Raleigh, is already acquiring great books on note writing, i.e. notenetwork.com - This website is for sale! - notenetwork Resources and Information. - Just take a look at the paper forum (o;