would this work in theory?

Question

this guy will owner finance his house which is worth 200k arv.  if i bought it for 180k and sold it for 200k i would still be making monthly payments to the owner BUT i would also have money left over because i wouldnt pay him back in full right away, i would pay him back monthly or whatever the agreement.

SO IN THEORY, would this be like taking out a loan, just with more risk and more work?

even if i ended up losing money off this deal, i would now have money for down payments for profit, and marketing etc etc.  so in the end it would come out as me making a profit.

hope that all made sense

Larry Turowski · Answer

In THEORY, yes it would work.  In REALITY, no.

Rick H. · Answer

Account Closed You are either trying to buy equity or cash flow at a discount.

If you were to buy a property on terms AND a 10% gross discount, you still have about 8-10% resale costs PLUS holding costs if you intend to retail for $200K.

If you were to sell on a wrap without a broker, you might be able to squeeze out a profit, but would take some time to realize the margin spread, your interim costs might not get recaptured and this is all dependent on a buyer who performs on their end for some years.

Personally, I'd spend more time looking for fatter deals and watch what more experienced deal makers do in your area.

Joe Villeneuve · Answer

NO.  If he's lending you the money based on the sale of the house, then it should be written as a lien on the house (if your seller is even semi-smart), so, just like any other mortgage financing, once you no longer have ownership of the house, you have to pay back the loan...at the time of your ale to someone else at the $200k you are looking for.

You can't have two people with loans on your house,...both with 1st position lien rights.

Elizabeth Colegrove · Answer

Totally agree with @Larry T. !

Wayne Brooks · Answer

The loan would have to be paid off when you Sold the house, so the buyer could get clear title.

would this work in theory?

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