BiggerPockets

My husband and I looked at a 2 family home today. The sellers are open to creative financing and I am wondering if there is a way to create a win/win situation. Right now they are asking WAY to much for the property but I was hoping with all of the intelligence out there someone would come up with a creative way to work this out.

Here's the #s.
asking price $180k
fair market value$130-170K
taxes- $1400/year
water/sewer- $600 year
insurance-?
current rental income- $1250 the rent could be increased $1450
The house is in good shape, updated interior, new roof, paved driveway, updated electrical.
They currently owe $80K on this house.

What would you offer? I know they need to sell to pay off some bills.

Thanks in advance!
~Heather~

Jon, what if they went with owner financing with a low rate, like 3%?

Thanks Scott and Wheatie,

Our plan is to buy and hold. The current owners are willing to provide the financing but how does this work if there is a mortgage on the property? Wrap mortgages are "illegal" in Mass but our attorney said it could be done. Perhaps I'll give him a call.

Ok you still have to take into account that situations change, holding the property may not be possible in 2 years for some reason. Overpaying or coming in at market price for owner financing is not a great idea as you would be upside down at this point. Especially taking into account the market right now. Make a reasonable offer and realize that in most markets it takes at least 10% to 15% off of market price just to generate interest in a rehabbed property. Buy right to give yourself a fighting chance

I really dont have much experience in the lease option area. You may be able do a land contract... but Im not sure. My experience with owner financing has only been limited to taking notes myself and I have bought on land contract. What I have read is the lease option is one way to get around the "due upon sale clause" and yes I believe you could then reoption it to someone else if that is what you mean. But I would verify that. Sorry I cant be of more help.

My understanding of a land contract is when a buyer gets possession and makes installment payments to the seller. The seller keeps the legal title and is responsible for any underlying mortgage until all payments are made. The seller then deeds the property to the buyer. Land contracts are also know as Contract for Deed.

It is my experience that most sellers won't do a land contract if there is an existing mortgage, at least in Indiana. Strictly because it is harder to get the property back in the sellers name if you defaulted on your obligations. Another way to do it would be a lease w/option on the property for 5 years. I agree with what John said a few days ago, it seems like a fair offer would be about $90,000, not over $100k.

Thanks Aaron,
That's a good point. I was going by fair market rents in the neighborhood and surrounding areas, it seemed like they were well below the average.