Were looking to wholesale a property to an interested investor. He stated "at $550K . . . gives me enough room to talk my money provider into a reasonable money . . . your seller has to carry 10% of the price in second position for 90 days . . . I don't have to sell the place to get him/her the balance . . . just coming out of pocket every time I do one of these is a little hard on my wallet . . . I just take it out of money that comes immediately following the purchase . . . ."
What are the stipulations of carrying 10%? What does this mean.
You're buyer is wanting the seller to give them a loan for 10% of the purchase price. That loan would be in second position after whatever lender is lending them the bulk of the cash. The seller would be repaid within 90 days.
"IF" i understand your post correctly, you buyer is asking you to carry 10% of the purchase price. It sounds like he needs you to do this so that he doesnt have to put up that amount of money to his hard money lender.
What he is saying to you is this. I will give you 100% of your asking price, paid as follows, 90% at time of closing and 10% in 90 days, Your note for the 10% will be in second position, so if I royally screw this up, and lose the property in 90 days then the lender in first position will foreclose and you will not get your 10%.
My question to you is do you make a profit at 90% of your asking price? If the answer is yes then you dont have a lot to lose
To your success
as a note of caution, you need to record your note in 2nd position at the time of closing, so that you really will get paid. Dont take his word that he will take care of you after the closing for any reason.
Thanks Josh Caldwell & John Holdman for your inputs. Would these terms be reflected on the contract as well so that the escrow officer understands what's going on at closing?
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