How to structure an offer

Question

Have a property thats avail locally. two houses and a vacant lot all being sold as one package with asking price of 220k.  I plan to use one house and the lot as a business property and rent out the second home.

Im not approved for a loan but have been told I will be eligible in the new year once my next return is avail for review.

Id like to make an offer on this property. Id need some intermediary financing to make this happen. Ive considered making an offer contingent on owner carry for 1 year or some similar arrangement. I have a down payment and great credit but the bank seems to think my D:I ratio isnt acceptable ( Ive since paid off two student loans and a CC and my wife paid off her auto loan ).

Id like some advice on how to structure the offer and poss what to offer. Im not sure I can fork over too much cash as I suspect Ill need it to put down when a bank approves me at which point I would pay off the seller but I would think the seller would like to see some earnest money.   thoughts and advice appreciated.

Paul Choi · Answer

@Jason K. Agree that seller financing is the best route.  If you can get it, then awesome.

HML is just a back pocket option.  Better to get a piece of the deal than get nothing at all if it's a good deal.  also, you don't have to keep the HML loan for the full year. You can refi as soon as you qualify, which sounds like it's only a few months away.

Jason K. · Answer

They wont split the parcels. Ive thought of a HML but dont know one and dont want to be facing a year of 11% interest.

Im leaning towards a near full price offer and asking for one years financing at 7% interest.

Paul Choi · Answer

Do these properties need work?  Maybe HML?  You can offer below asking with a HML since it is cash and fast closing. If the market conditions allow it.

Of course, best is owner financing since it costs less in fees than other avenues and all the terms are negotiable.  I would research HML and present 2 offers to the seller.  low number for HML, and an offer near or at asking with seller financing.

Or swing for a FHA loan on the house your occupying and HML or seller financing for the other?  Can it be broken up into pieces?