Posted by Bill Gatten on November 12, 2002 at 13:48:11:
With your aptitude for Math, you are bound to make it in this business! You are one of us! 10% of $189,000 is probably closer like 5%, isn’t it (I think so, but lost my book)? :o)
Considering the monthly payments, were I to be your competitor, I would make him a full price offer at $190,000, and then offer to pay him $4-5,000 now and another $4-5 upon my refinance 3-4 years from now. (No one else is going to come close to a full priced offer…he’s dreaming).
In the meantime upon getting the property under a non-exclusive option, I’d bring a resident beneficiary in at $195,000 a PACTrust equity share, who would pay me 10% down (19K) and a positive cash flow of a couple hundred per-month for the next three years: at the end of which time the resident would re-fi or sell, repaying me any excess equity I had been carrying, plus half of the accumulated appreciation and principal pay-down over that period of time.
After locating my resident beneficiary, I would THEN exercise my option.
During the term of the PACTrust I would have no management, maintenance, repairs, upkeep, property tax, insurance or HOA dues (the resident has to cover all of that in order to be entitled to the income tax deductions for mortgage interest and property tax).
I am going to go look at a home today which the owners are motivated to sell quickly and are trying to sell for sale by owner. I got this lead from a bird dog. The loan is assumable. Loan amount is approximately $179,000, payments at approximately 7% are $1431.00 per month (everything). They have owned the home for only one year so have little appreciation/equity there. The home is about 9 years old, in very good condition. I heard from my source he is willing to provide owner financing, etc. He “needs” at least $10K to help with moving expenses, etc. They are relocating.
I want to offer him as little as possible (after all $10,000 is 10% of what FMV “probably” is - about $189,000) and take the loan “subject to” putting it into my own trust. Then I would like to rent the home out with an option to buy. I’m hearing I could only ask as an option 3-6% of the price of the home, though. As with most of my leads, there are 2 or 3 other investors standing by to make their offers as well. Just the way it is in California, I guess. I want to make my offer attractive but do not want to lose my shirt. Obviously, at this time of the year there are not many people moving, whether buying or renting. Any advise is much appreciated.