Posted by davil__OH (newbie) on October 24, 1998 at 11:13:33:

Hello all! I’ve been looking at this deal this morning, and I have a couple of thoughts… If the seller is unwilling to put a loan against some of his equity, how can he get at that money without selling the house? This is assuming he has no other way of raising the 20K.
The seller wants a guarantee that the house will be sold at his price. Seems to me that the only way that will happen is if you buy the house, Jim, and have the seller carry back a 2nd and 3rd. The second could be discounted and sold for the 20k. I haven’t run the numbers, but I have a feeling the seller will have to come down off his price in order for this to be worth the effort. Furthermore, you probably don’t have an interest in buying the property, which is why you want to l/o in the first place. Perhaps if you run the numbers for the seller he’ll come around. Sure, he can get his 20k without going into debt, but he gives up equity in the form of a discount. Personally, i can’t understand fearing debt so much that I’d be willing to give up sizeable chunks of equity in either discounts or comissions. If this seller is reasonable, I think he should be able to see how doing the deal with you and a home equity loan will save him money. --davil


Posted by Jim_NC on October 22, 1998 at 16:49:21:

I have found a motivated seller that is willing to l/o me his house. Here is the problem. He is in the process of building a new home and needs some of the equity he has to pay down on his new home. He has $50,000 equity and only needs $20,000 of it right now.He has been trying to sell the home himself for three months and is going to list it with a realtor on Monday if I can’t come up with a solution for him. I can buy the house from him for $150k and sell it on a l/o for in the $160’s. My rent to him will be $1200 per month and I can rent it out for $1500. So it will be a good deal for me if I can just solve his problem.

Bottom line is he’ll do the deal with me if I can solve his cash problem.

Any suggestions on how I can put this deal together? I have to come up with something by tomorrow.

Sounds like a no money down deal… - Posted by Kevin(OK)

Posted by Kevin(OK) on October 23, 1998 at 09:40:16:

…to me. First, this deal sounds to skinny to me. With that said, why can’t you do an 80-20 loan? And if you can get the seller to carry a third mortgage to cover closing costs, you will truly have a no-money-down deal.


Re: NEED HELP WITH L/O DEAL ASAP! - Posted by rudy=austin

Posted by rudy=austin on October 23, 1998 at 03:26:41:

take an option and help him sell the house and if he want to also list it have the realtor exclude you from the reservation…then if you sell it you get paid…if the realtor sells it you go away empty handed…rg


Posted by Kev NC on October 22, 1998 at 18:05:29:

With conventional rates so low, he could probably just get a 2nd or an equity line and pull out $20K of his equity within a week at a reasonable payment. Depending on how much the pmt on his 1st is, your monthly lease pmt of $1200 might cover some or all of the pmt on the 2nd. This 2nd loan would be paid off when you (or your assignee/3rd party) purchase the property.

One more point: If you sign a 12 month lease with him, the lender on his new property will take 75% of that income when figuring his qualifying ratios ($900 in this case). The new payment on this 2nd/equity-line will be nothing compared to trying to qualify for the new house loan with an unrented & unsold old house. Furthermore, the tiny amount of interest that he will pay on the equity-line pales in comparison to the $7,500+ he will pay in real estate agent commissions if he lists the property.

Good luck!

Kevin in NC.

Seller won’t do that - Posted by Jim_NC

Posted by Jim_NC on October 22, 1998 at 19:21:48:

I mentioned that option to him and he doesn’t want to do that without having a guarantee of when or if I get his house sold. He is not worried about me finding a tenant or the payment,just about the extra debt without knowing what will happen. I understand that I may not be able to do anyhing here but I would like to get this deal if there is any way.

Re: Seller won’t do that - Posted by JohnBoy

Posted by JohnBoy on October 24, 1998 at 13:34:12:

It sounds like he is worried that if you don’t exercise the option by the time the lease is up he will be stuck with the extra payments until he finds a new buyer. One solution would be to offer a longer lease. Offer to give him a lease option for the same term of the 2nd mortgage. Usually 10 - 15 years. The longer you can tie up the property at a preset price, the better for you. Wouldn’t that be nice to control a property for 10 - 15 years with a locked in selling price at todays market value? Just think of it. You can sub-lease it over and over again until someone exercises the option.

Explain to the seller that you work with people that want a chance of owning a home of their own. Sometimes the person may not be able to get the financing with-in a year after leasing the property. But you are always willing to work with these people when they have paid their rents on time and have put forth an honest effort to do everything they are required to do. If they eventually have to move out, you have another couple waiting. If his concerns are about when your lease with him runs out and no one has bought the property and you decided not to buy or renew the lease for another term that he would be stuck with the payments again until the property sold? Tell him your more than willing to guarantee that from happening by signing a LONG TERM lease option. Even it’s for the same term of his 2nd mortgage. This way his payments are guaranteed from you until his 2nd mortgage is paid off or until you get the property sold, which ever comes first.

If this satify’s his needs, you will have an opportunity to make a ton of money on this if none of your tenant/buyer’s ever exercise the option. In the end you yourself would even buy the property after a long term like this to take advantage of the equity built up over the years.

Good Luck with it.