Need Help I'm Very New - Posted by Ted

Posted by Ted on November 17, 2000 at 05:31:22:

Here is my situation

I have been looking for the last few months for a single family home to purchase and rent out for monthly cash flow. As I’ve been looking around on the internet and finding sites like this one that talk about other non conventional ways to make money in real estate instead of the buy and hold strategy, I thought of a new way to do things
Here’s the deal.
Single family home in modest community that the typical going price for similar home is $85,000. Through the grape vine and some research I have found that I could possibly purchase a home in the area for around $75,000.
I am thinking that I can get home for $75,000. Put a down payment of 33% and have financing for the rest. I then place an ad stating “Owner financing. Small Down Payment.”

(I guess this would be called a “wrap mortgage”)

The terms looks like this.
I sell them the home since I am financing it and they will not need to qualify for $90,000 ($5,000 above the typical home value in the neighborhood) I do a loan rate of about 2% to 3% above my loan rate.

So I now have a note for $90,000 at 2-3 percentage points above a typical interest rate. Now fast forward 6 months to 1 year. I sell the note to a note buyer.

First question Does this make sense? or am I missing something.

Second Question Is it legal?

Third Question How big of a discount will the note buyer want.

Any other feedback will be a great help. Thanks in Advance.