Selling and carrying mortgage questions (long)

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I'm looking for comments/suggestions on the situation outlined below.

I've done a lot of looking around and have read many different posts but have not seen anything that closely resembles my situation. I'll try and lay it all out but if I miss something please feel free to ask. Thanks upfront for all your replies/thoughts.

I have a house that we bought ten years ago in an very unique area of Orange County NY that is within commuting distance to NYC. Most of the houses in the area were built in the 40's as summer cabins for residents of NYC. Over the last thirty years most of the houses have been converted to year round, but some are still get away places and the area is dotted with houses that are in various states of disrepair and abandonment. There are several reasons this area has lagged behind other areas close by. One is the extremely restrictive zoning laws. Two is the 'roads' are privately owned and it's unclear by whom, possibly a corporation that owned them many years ago but has since gone under and the town has refused to take over the roads because they don't meet town standards. So they are not well maintained. Three, some of the houses only have access to a community based water company that only provides service in the summer. Our property has its own well so that's not an issue for us.

Four years ago during the downturn we scored a great deal on another house about twenty minutes closer to the city that we financed with a mortgage provided by a family member who gave us extremely generous terms. So when we moved out four years ago we half heartedly tried on and off to find a buyer and/or a renter but we didn't put a lot of effort into it because the market was crashed and the mortgage didn't cost us enough monthly compared to our income/work load to adequately motivate us to deal with it. Fast forward to now. Since moving I have lost a lot of my earning ability because of some severe health issues and so I'm getting more motivated now to figure something out.

We originally paid $115,000 and we still have a BOA mortgage (5.875%) that we owe 65k on. We could afford to pay that off but doing so would leave us spread precariously thin since we'd have to spend about all of our liquidity to do it. Also I'm fully aware of the due on sale clause.

The other day we met a couple that has been renting just down the street for the last three years at $1000/month. The house they rent is very similar in size (~800sq. Ft.) but has a much smaller non fenced yard. Since they expressed interest in buying and are familiar with the area and all its uniqueness I think they have excellent potential. They asked me what we would list for if we put it up on the market. I got their number and told them I'd be in touch.

According to some of the web based RE appraisal sites the home is currently worth about 100k. I assume that means in move in condition, however, sometime over the summer someone broke in and stole some of the copper plumbing. It's a tiny house with only one bathroom so it's not like they took a lot but it's definitely something to be done. Also I was in the midst of replacing the kitchen floor when my health issue occurred so that's something that needs to be finished by whomever buys it because I can no longer do the work. I mention all this to say that I figure I'll be asking around 90-95k, so there's plenty of room to come down and still have enough to cover what we owe. This should also give any buyer enough room to do the work that needs to be down and still not be underwater when they're done.

Since we're going to be taking a loss of 20-30k on the sales price difference, I was hoping to be able to entice them (or another buyer) by providing seller financing. I mean whoever buys it is probably going to have to get a mortgage from somewhere, why not us? The profit we could get from holding the mortgage could help take the sting out of the sales price difference. My wife is not as comfortable as I am to go this route because of the risk but I think it's worth it for the extra profit.

Mostly I'm interested in seeing if there might be someone in the area that would be interested in helping us navigate this and/or partnering with us to share the risk and the profit? If we didn't have all the risk it would be immensely more palatable to my wife. Honestly she'd be happy if we just sold it for what we owe BOA and were done with it but I can't see leaving all those potential dollars out there for someone else to make.

I do have a lawyer who I've used twice in the past for my previous two purchases (the one bank financed, the other cash) but I think this might be beyond her comfort zone. So at the very least can someone recommend a good lawyer in the area that would be knowledgeable about how to proceed? Also I'm hip to using a loan service provider for handling the mortgage, but I'm not entirely clear on how to get to that point, if I can't find someone to help us navigate through?

Thanks for reading and I'll keep reading around the forums in the meantime to gain more knowledge.



Born and raised fellow Orange Countian here :)

My thought is if you are uncomfortable with owner financing why not rent to own?  This will alleviate the risk and you can still get some passive income from the place.

I'm currently operating farther south in westchester but my mom is also an agent and either one of us would be happy to chat with you.  Both of us are involved in investment properties so this is right up our alley.

Risk vs reward can be a difficult thing to determine and I would want to know a bit more about your goals.  Feel free to PM me with your contact info if you would like to chat.