Posted by Ed Copp (OH) on November 18, 2000 at 15:29:40:
Marbs,
Your ideas are O.K. for the local investors meeting, but are probably complex enough to confuse the seller completely. When folks are old, tired, and in poor health they often respond to simple things.
Try this move the price up instead of down say to $72,000. Offer to purchase on a land contract at an interest rate that is a bit low but higher than the money market accounts. Offer to pay the land contract off in five years (in a lump sum). When you start to negotiate make adjustments in the interest, and the payoff time and leave the price up (at $72,000). This will give you some time to find the right buyer, perhaps build some equity and improve your credit along the way. Just keep the transaction as simple as possible.
Experienced investors, please help me out on this one. What’s the best strategy for this situation? (I’m meeting the sellers on Sunday.)
Sellers recently inherited house with no mortgage or other liens. Free and clear. (I’ve checked.)
Both husband and wife (sellers) have pressing health problems, and have stated that they “want to get this house sold” and be done with it.
House is in very good condition and comps at $82,000 (in a decent, but not great, neighborhood).
So far, sellers have dragged their feet on doing anything to sell the place; I got their phone number from an acquaintance who knows I buy and sell properties. Doesn’t seem that there are any other potential buyers in the picture. My contact also told me that the seller/wife stated to him that they would accept $70K to sell.
Given their state of mind, I think they’d accept $60K-$65K for a fast closing, maybe less for all cash. My initial thought is to get it under contract and flip it at just under retail – say, $78K (through a double-closing).
I want to make sure I do this deal right, so I’m asking for input from the experienced investors. I have bad credit (divorce) and can’t put up my own $$, so that limits my options. My objective is to generate cash … and fast. Are there better ways to structure this deal? Other methods that come to mind include the following (let’s assume my purchase price is $65K):
borrowing private $$ and offering a good interest rate, payable in lump sum after 12 months (and 1st mortgage position) … or splitting the profits upon resale;
doing a lease-option and sub-leasing it out for positive cash flow, with the idea of marketing it for resale;
obtaining owner financing for $25K (and a 2nd mortgage position), with low payments for the first 12 months and an adjustment thereafter, together with a $45K first mortgage to a different lender, and then renting it out for positive cash flow until I find a buyer (within 12 months, so I could cash out).
Experts, please help me out with this one. Thanks!
You need to solve THEIR problem. What do they want? Likely Ed’s suggestion is just as complicated for them. If they won’t carry a note for you with little down until you can sell it, then just try to get in under contract and sell it to someone else quickly and do a simultaneous closing.