Posted by Lynn (FL) on January 07, 2008 at 18:43:31:
Michael,
I found the section you were talking about (pages 22-25). Great information that explains my situation exactly.
Thanks.
Lynn
Possible Quick Turn - Posted by Lynn (FL)
Posted by Lynn (FL) on January 06, 2008 at 11:33:55:
I have an option on a SFH which I think would make a good “quick turn” transaction. My option is for the balance of the loan, $235,000. I think the property will appraise around $325,000. My question is whether I could find a buyer with 680+ middle FICO score and $32,500 cash of down payment. I will hold a 2nd for $32,500, leaving a balance on the first of $260,000. Terms would be 9.5% interest for 30 years, with payments of $2,186.22.
Would this be a good candidate for a note buyer, at 12% Yield, with a buy out price of $212,540. That, plus $22,460 of the down payment would pay off the original balance. I would pocket the additional $10,040 and collect on the 2nd.
The deal looks like this:
Sell Price = $325,000
Down Payment = $32,500
2nd = $32,500
1st = $260,000
Terms = 9.5% x 360 payments = $2,186.22 per month
12% Yield = $212,540.75
Am I on the right track or have I missed something?
Thanks.
Lynn (FL)
Earning Property profits W/O owning the property - Posted by Michael Morrongiello
Posted by Michael Morrongiello on January 06, 2008 at 19:33:08:
Lynn:
The #'s are in the “ballpark” -however unless you plan to purchase the property for $235K with your own (or borrowed) cash and take it off the street, its your plan to enter into title and then exit title in order to “flip” this home which may present some challenges.
It might be best to have the current property owner / seller with whom you have an option with to purchase for $235K SELL the home DIRECTY to the buyers your procure and then also finance them.
The current owner /seller will move through the “paper” to get the $235K cash they seek, put a profit in your pocket, and then assign you the 2nd lien Mortgage after the closing.
You will earn you profits on the sale of the PAPER not the sale of the property.
Best to your success;
Michael Morrongiello
Is it legal? - Posted by Mary CO
Posted by Mary CO on January 12, 2008 at 21:31:51:
Michael, isn’t is illegal to procure buyers when you are not a principal to the transacion?
I thought I could activate my real estate license but then I will only be entitled to the agent comission.
So, I don’t want to act like an agent.
Or is having an option on the property makes you a party with an equitable interest?
Re: Property profits W/O owning the property - Posted by Lynn (FL)
Posted by Lynn (FL) on January 06, 2008 at 20:29:25:
Michael,
Thanks for the suggestion. If I understand, you’re saying to either (1) purchase myself, then resell, creating paper; or (2) help present owner market the property and set up the paper transaction, making my profit there.
Lynn
Equitable Interests can be sold - Posted by Michael Morrongiello
Posted by Michael Morrongiello on January 13, 2008 at 15:32:01:
Mary:
I am not an attorney or tax practioner so I cannot speak to the “legal” issue you pose - perhaps you can get more specific input from the legal discussion board as to your concern.
However IF you have an OPTION to buy a property you have as you point out a legitimate “an equitable interest”. I know of no illegality in marketing a property for sale in which I have an bonafide equitable interest.
Michael Morrongiello
Re: Property profits W/O owning the property - Posted by Michael Morrongiello
Posted by Michael Morrongiello on January 06, 2008 at 20:47:27:
Lynn:
That is precisely what I am stating…
Either Take the deal off the street with your own funds (or funds you have access to) in which case YOU will now own the property and have effective LEGAL TITLE.
OR
Better yet (my preferred method) - ASSIST these motivated property sellers in Selling their home through the creating of owner financed “paper” whereby they will achieve a sale of their property, get their cash (from the sale of the paper), and also allow you to earn a profit.
In my Unity of Real Estate & “Paper” strategies section we call this;
Earning Property Profits without EVER owning the Property.
In essence your profit is generated through your know how, ability to finesse the parties (both buyers and seller), and the marketing magice of owner financing.
Michael Morrongiello
www.sunvestinc.com