New SLO

[<Steve> 82]

I love when this...

 

I have a new SLO that I just started marketing for a tenant/buyer. I just received a few emails from a married couple who just love the house and want it. They are offering to put down $52K It seems the house they are currently in the Department of Transportation is taking it to put a road through. I am guessing this is where the cash is coming from.

 

My SLO house market value is $140K My price is $120K so I have 20K in equity in this 3 year SLO. The seller owes $59K on the current mortgage and they want their equity.

 

If I keep it as a SLO I have $20K to work with and can double or triple what I would expect in option consideration. What's left of the $52K the t/b can keep in the bank for a down payment. Or, I could try and restructure the deal with the seller as owner financing and try to get the deed then finance the buyer.

 

If I try to restructure the deal to get the deed I would need to lower my price to at least $90K and that may require I give the seller $30K so I would come out to about the same.

 

Does anyone have any other ideas or strategies I should think about?

[<Steve> 82]

hmmm

 

Just spoke with the potential t/b and they are for real. Their credit and income seem good to enter into a L/O and they have the potential to buy. They do want to adjust the rent amount lower by putting more down, which I anticipated and I can do that. There issue is if they put only part of the $52K down as option consideration they will loose what they don't use. So if I take $15K to $20K as option consideration lets say, what do I do with the rest of the cash. LOL nice problem to have. I could hold the balance in an escrow account should they purchase and return it if they decide not to buy?

 

I'll be meeting with them in person this coming weekend to show the house and get to know them better.

[MichaelC 160]

My first thought in this is why on earth would they put down $52K option consideration on a $140K house? Why not just buy it outright??

Any number of ways you can go with these folks. What about assigning your deal over to them for your equity? They pay you a $20K assignment fee, step into your shoes and then deal direct with the homeowner. Speaking of the homeowner, where does he stand with all of this? Is he willing to do anything creative on his end?

[<Steve> 82]

Good question MC. I will get a better feel when we meet in person. I think they have a windfall and need to act quickly in their mind and just love this house.

 

The owner is out of state and haven't spoke with the owner yet. The assignment is a good way to go and if the seller receives the balance of $30K I am sure they will listen.

[BrianGibbons 0]

A reverse assignment is when you put a note and a nmortgage on a SLO.

 

Say $100K house, you lease w option for $90K. You sublease and sub option for $110.

 

Your profit is $20K, so you put a lien on the house for $20K. When the house sells you get your $20K.

 

The trick is in the negotiation with the seller.

 

You say,

 

"Mr Seller, if I can get your $90K with out agents fees and closing costs, do you care what I make?"

 

Then when the TBer gets the financing, you create a lease with option with the seller and TBer in return for lien of $20K.

 

At closing you receive $20K less some costs, maybe split the closing costs w the buyer.

 

Avoids a double close and transactional funding.

[<Steve> 82]

Hey Brian-

 

I understand what you're saying a bit more complicated though. MC's comment I think was to just assign over the agreement I have with the seller to the buyer for an assignment fee and let the buyer & seller go to close. But unfortunately, this time, the owner was not comfortable with owner financing.

[BrianGibbons 0]

Steve,

 

yup, theory and real world, different.

 

Its important to use the right strategy for your situation.

 

Good example. Thx!