Real Estate Investor · Boise, ID · Member since 2009 · 62 posts · 27 votes
I have 2 properties that have been rentals that I am now advertising for sale on MLS. I haven't had much activity on either, so I began advertising as owner carry.
Each property has 2 mortgages, one of which was financed 100% in '06. The other has about $10K in equity. One buyer is interested in both properties. His intent is to purchase them on a 20 yr note and have them as rentals.
Both 2nd's mortgages are 30 amort. w/15yr balloon at 9% and 13.75%.
What is the best way to structure a wrap with both properties having 2nd mortgages?
Market rents for both properties are $650 and $575.
What would be a fair interest rate w/buyer coming in w/3% down?
First, you left out quite a few important details like your pay-off for both loans on both properties, the respective interest rates of both 1st loans, and your buyer's offer prices for both properties.
Second, have you considered what the difference is between you doing a wrap individually for both properties and wrapping both both properties with a blanket? I can picture several scenarios where the tenant(s) in one of them stops paying rent (for whatever reason), and that causes your buyer to default. If you'd need to foreclose, would you prefer to take back 1 or 2 properties?
Third, if a buyer wanted to put down anything less than 10%, then we'd be talking about LOs/LCs instead of wraps.
Fourth, unless you intend to hold financing for roughly 20-30 years, then I hope that your properties will appraise for at least the total of both offer prices. Otherwise, your buyer will find it quite difficult to refinance to cash you out later.
Finally, in case you missed it, I told you--a few different ways--to consider your exit strategy/strategies before you enter this deal.