Posted by Bob-Tx on July 10, 1999 at 18:37:32:
Emmett
Well, I’m no expert in this type of deal but am in process of doing my first…our normal business is rehabs to owner financed sale.
That being said - I recomend the following:
1 - get recent comps. If seller has a recent appraisal get a copy also.
2 - If the numbers look OK (fmv well above note balance & lien payoff) I should think the offer should be subject to…get that deed and leave him on the mortgage.
3 - the exit plan would be to sell this owner financed, as is to the first that comes along with substantial down payment. I suggest 11.5%, 30 yr. amortization with a 3 yr balloon unless you want to hold the note for a longer time period.
4 - you don’t say what the existing mtg pmt is, but based upon a $78k sale price with $5k down your buyer would be paying you about $853 based on the above rate & term…does this translate to adequate cash flow?
If not, shorten the term of your note to bring the monthly piti up to desired level.
5 - neither do you mention the condition of the house…better get somebody by there to take a look asap so you know where you stand.
Those are thoughts from a marginally knowledgeable guy interested in doing more deals like this. I will look forward to reading from the more experienced players out there.
Bob