Posted by Judah Hoover on August 29, 2005 at 18:36:26:
Normally I would say ?first get a good mortgage broker? but you don?t need one here. Let me break this down for you.
Step one TAKE THE $75k!
Step two lease him the house with an option to buy at a 10% increase of list price. (if he wants to pay list price he can use a realtor and go the standard route. He wants you to carry the financing so the price goes up. Tell him he has an option to buy the house for one year at $415k (375k + 10%), after that the price goes up by a 4% cost of living increase per year. If it wasn?t water front I would say be nice and fix the price for three years but you have some power on this one.
Step three set payments at $2200 a month. That is what a 7% mortgage on the remaining $330k would be. If he thinks he can do better? tell him he is right and give him the number for the local bank (he won?t use it there is a reason he wants owner financing). If he wants rent credits tell him anything above $2200 will come off the $330k.
You may need to talk to a local investor to help walk you through this but it seems like a good deal you have there.
Remember he has the $75 to put down, be sure you get it, don?t let him talk you out of it as a down payment.
if he just wants to rent, great rent it to him for $2300, but no option to buy
if he wants to buy fully stocked with conv. fin. same deal 10% increase is a steal for him