I want to become a private lender for a buyer of a condo in Orlando. He needs to borrow $120K. How do I establish the promissory note terms?I was thinking 2-3 years with a balloon payment. Looking for examples from BP community members. Is there a calculator app that you can fill in and get the numbers? Thank you in advance.
I hope this doesn't detract from your post, but I am on the other side of this same equation and have some related questions. I am considering purchasing an investment condo using owner financing. After down payment, I expect that the amount borrowed will be somewhere between $120,000 and $130,000 with a 2-3 year balloon payment. My research indicates I'd probably be looking at an interest rate between 8 and 12%; is this true? What kind of reserves should I look for in the HOA? I would be purchasing one unit out of four in the building, which was constructed in 1975 and needs exterior repairs including to the roof, carport, trees and paint. It's one of those "least nice properties in a nice area" situations; I'd be looking at holding the property over the long term and there is ample new, high-quality construction occurring in the neighborhood, which is situated in the heart of the most desirable downtown area in my city. I would manage it as a VRBO property, convert to a traditional mortgage within the next two years and make aggressive payments to cut down on the principal as quickly as possible. A calculator app like Robert suggested would be very appreciated. Thanks for your time -- and again, I apologize if instead I should be posting this as a separate thread. I'm brand new here and just learning the ropes!
The more the merrier. You brought up a good point regarding converting to a traditional mortgage before a balloon payment comes due.