I have a customer that wants to do owner financing. I have a standard contract which has the blank line to fill in terms. If my client says that he prefers his attorney to make a specific financing contract with our agreed terms, how would I go from there? My contract still needed for my due diligence?
Spell out please what is happening
House for sale, who owns it, mortgage balance if any
Buyer or seller is the client?
You are an agent?
Im an Investor (Newbie) and the seller would be owner financing the property to me. (sorry for the misunderstanding).
The seller has a house that he has not listed for sale yet. I asked him if he would consider owner financing me the property since he is not willing to go down on his price. He told me if the numbers look good he would accept.
The seller inherited the house last year. He wants 280k for it but my calculations show me that it would sell for 265k. Similar homes in that area are renting for about $1,650/month . I would like to get the price to 265k and payments of $1,000 (30yr 2%interest) a month being that expenses add up to about $400 a month. Do you think this would be a good deal on my side?
When a deal is that close (market price to sales price) and you have to give him the price. Then I get the terms or walk away. If the rent has to be 125% of the payment (PITI) for me to consider it and I will only consider it if I had a lease2own prospect wiling to put up some front money and do the maintenance too-
So, if you are at $275K at 1K/mo- 60mo balloon PITI and can get a leease2own in at $295K at $1650 and they do maintenance with a 36mo. balloon- I will do the deal... I would have the lease2own party also go through a credit repair/mortgage person to help them qualify
Okay thanks John.
Personally I don't think it's a great deal. You said you have to negotiate to get to $265k, what the property is worth. So you're not getting any discount but rather paying full retail. BTW - make sure you get an appraisal to check that it's truly worth $265k.
Then on the rent side you really should be at $2k rent for a $1k mortgage payment, to cover all the extras: vacancy, evictions, capital expenses, etc. Even the 1k mortgage payment is a stretch, as you're using a 2% rate to get that.
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