A mortgage broker offerd me a deal.

A gentleman needs special financing so I was asked to participate in this deal:

Property is valued at 800k the gentleman is willing to give me 60k in advance as well as pay the mortgage. In about 6 mos when his credit score is good enough he will by the property back from me. What are my pros and cons. I am a newbie with good credit.

Are you prepared to own the property if he doesn’t follow through or isn’t able to complete the deal? If so it could work but if you do not want to be left owning this property you had better think long and hard about doing it.

8)

I would imagine putting 60k down that he is serious and did his homework. What are some legal issues?

How do know that 800k is the right value of the property? In today's market, what a property appraises for is not necessarily what it sells for.

Did you finance the property at full value through a lender or are you holding a secondary lien? Will this buyer pay you directly and you pay the bank/lender?

You may also consider that should this gentlemen's credit not improve enough in 6 months to allow him to obtain financing for the purchase, you may want to sell the note. Is it assignable?

$60,000/800,000=7.5% down payment which would make it difficult to sell the note/contract as most investors look for a minimum of a 10% down payment and a good payment record. They will need to see the amortization schedules (original) and one with payments applied. They will also want to see proof of payments, recent appraisal, trust deed. proof of insurance, tax records, credit records and work history of payor, etc. etc.

The interest rate on the note is also a big consideration and will affect the amount of the discount a potential investor may calculate. The lower the interest, the greater the discount.

Of course, if the cash flow is good, you may want to bring the note to term and if the buyer doesn't exercise his option to buy, you could resell the property at the new value. It all depends on how the contract is written and if it is assignable.

Not knowing the terms of the deal, this information may not be applicable.