Creative Solution Needed

7 Replies

Hey ladies and gentlemen, I dont post much but stay active on the site and podcasts.  Love all the ideas and info that moves so freely.  I found myself in a situation that I'm hoping you can help me out with.  so..

Ive worked hard, and lived out of town for 6-7 years.  Finally got the opportunity to move back home and work locally, that means possibly moving back in with the parents as the markets so hot and things are moving so fast so ill be able to save some money and not rush into anything.  However I get a inside line on a waterfront house (I have a boat and grew up on the water so I love it) thats not on the market yet.  Its owner is a third generation family friend.  So the house has been paid off for quite some time, and has stunning views and waterfront access.  Smaller house, 1 car garage, semi updated, needs new windows, ac unit, carpet upstairs id put wood that matches the downstairs.  It's also a older house 1940's so its plaster and not drywall and shows some signs of settling.  

Bottom line is, I love it, the view, the water access, location to family and friends.  

Originally asking 300k, then 290k; the house currently sits vacant as the owner has moved, but the house is still in his older moms name.  The neighbor, also a family friend, said "I'm not buying the house for anything less than 250k, which makes me think the neighbor and him have had them talks and thats his preemptive bottom line.  

I have excellent credit, make about 75k/year with no OT, no other debt than my truck payment, and I have about 50k to put down.  

My question is;  all things considered, are there any creative solutions to get the house cheaper, not using a real estate agent, tax advantages, any incentive I can give the seller to sell a little cheaper than he wants that looks attractive, but benefits both of us.  

I feel like its a lot of house to consider myself, but theres only about 7 homes on this stretch of waterfront, without knowing the area, I'm telling you wonderful people on BP, the opportunity probably does not come up again for a long time to buy a house like this as stated earlier most of these homes stay in the family or get sold without hitting the market.  

Thanks in advance!!

You could see if the owner is interested in carrying part or even all of your loan. This would potentially get them more than they’re currently asking for, just spread out over time in the form of cash flow. Help them to see that they could get a better return on this money than just sticking it in the bank and since your families go way back there is a higher level of trust than just lending to someone they’ve never met. Good Luck!

Try a seller financing deal. If they own it outright, seller financing is a great options for both sides of the transaction. @Robert Tumulty

Seller financing might be the way to go. Being that it's a house on the waterfront, if this is on salt water and because it was built in the 40's, I would pay extra and get the most in depth inspection you can get. Time and salt water are known to cause problems. If you were to find things wrong in the inspection due to these factors that would cost a lot to repair, the seller may be willing to go down on the price. Yes, you'll eventually have to make up this cost on your own, but since you'll be living there you can space these costs out and make repairs as needed.

Thanks for the responses and seller financing I was thinking about, but the fine details to make it more appealing to both is where I also need some advice.  

Let me add this is my first purchase.  

So with seller financing, I suppose I could avoid any money down and save it for repairs, or if I say put 50k down, can I avoid some tax to make it more attractive to me and the seller by offering a large cash lump sum?  In a seller financing deal I understand I can negotiate the terms, but would one typically see a higher interest rate than from a bank? What are some incentives for the seller to sell to me for 250k vs listing for 300k which is what they've rumored they want.  

If I do seller financing with PMI correct? So I could put 10% down and save remaining for repairs. Maybe come up 10k more on asking price to compensate?

Any thoughts or fine details are appreciated, thanks

and thank you Jeremy but its freshwater.  no flood insurance required as it sits up high.

You could make an amortization table in excel and show them the total amount of interest they could make on top of the sales price by seller financing. If they don't want to hold the note over 15/30 years, show them how much interest they'd make on a 30 year am/5 year term loan seeing as you're paying mostly interest on front end anyway. That wouldn't be beneficial to you however having to pay the first 5 years of a note twice after you refi. I'd just make the schedule and play around with it to see what could work best for both parties but only after seeing if they'd be open to seller financing.

Thanks Cameron, that's a good point.  If seller dosent go for financing is there any other way to structure a deal to make it attractive? Waterfront property seems to be tricky to agree on price, and when appraisal comes its either super low, or they want to know what the agreed upon price is then it just essentially appraises for that value.

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