Posted by Michael Morrongiello on April 29, 2008 at 07:10:08:
In Reply to: Buying first Home / Is this Possible? posted by Brandon Goudey on April 28, 2008 at 11:52:27:
Brandon:
IF this seller is motivated enought and willing to be flexible there may be a potential deal here...the "art" is in the structure.The proposed HIGH LTV- loan to value financing (actually no money from you and 100% financing) along with a very low 3% interest rate that you trying to convert to cash do not represent very attractive terms for any paper investor. Also by you not having any "skin in the game" - theres far more increased risk.
Why not consider paying the sellers asking price of $114,000.00 - IF you can obtain these terms;
You put down $7K cash... then
Seller to hold a $25K 1st lien DOT & Note
possible terms: $25K @ 10%, fully amortized over 144 months, payable $298.77 per month.Seller to ALSO hold a $82,000.00 2nd lien Note.
possible repayment terms; Interst only payments of $225.00 per month (works out to be $2,700.00 per year of interst on $82K or 3.29% interest)Your TOTAL payments then would be $523.77
(the $298.77 on the 1st lien and the $225.00 I/O payments on the seller held 2nd lien)Now we arrange for you and the seller to SELL OFF that $25K 1st lien to generate approx. $18,000.00 in cash.
This is accomplished through a SALE / ASSSIGNMENT of the seller held 1st lien Note and DOT.
So, at the time of closing the seller would have a decent "down payment" in the form of $25,000.00 cash
(The $7K cash from you along with the $18K cash from the sale of the 1st lien Note)Thats enough cash often to sway a seller to do business.
The seller will also then receive $225.00 per month on their 2nd lien Note and DOT for a period of time that you will negotiate (like a 5 year, 7 year balloon, etc.)
This is one example of a "build to suit" transaction and how "paper" can be effectivel used to continue to BUY and SELL in todays very tight credit marketplace.
Best to your success;
Michael Morrongiello
www.sunvestinc.com
Author of the following home study courses;Paper into Cash - The Convertible Currency
How to create marketable Notes&
The Unity of Real Estate & "Paper"
Advance techniques using paper for both the acquisition and disposition of properties