Got a lead off a bandit sign, and it seems like an opportunity. This is my first real "flip".
Details- 3/2 in very good condition. They had some mold issues, and water damage they just had fixed, and they are tired of working on the house. Just looking to get rid of it.
So, they have a $94K mortgage on the property. ARV is $145K conservatively. From my initial inspection it needs about 12K-ish in work. Carpet, some sheet rock, cabinets in kitchen, and probably some touch-up paint. Bathrooms could use updating as well, but not necessary.
Now, I gave them the 2-option approach. A Low-ball cash offer, or seller financing for the payoff value. Of course they want the payoff value.
For the Seller financing I was thinking $94K with 8% interest and a 1 year balloon.
1, How do you word your contract for seller financing deals?
2. Do you pay the mortgage company directly or the seller each month?
3. What happens to the equity that is built each month?
4. Do they keep their insurance or would I have to get that while I am listing it on the market?
4. Anything else I am missing?
If anybody is bored and wants to help a rookie through a deal, give me a shout. I could definitely use it..lol.
@Blake Woodham What happened with this deal? I'm sorry you didn't get any input on it.
I'm assuming you want to take title and flip the property and they want their loan paid off. In this situation, you can do one but not both until you find another buyer. Or are you planning on allowing them to hold title while you do the work and flip it? Very risky to you here.
If you are pitching them a sub-2 deal, which it sounds like that is what you are trying to do, I suggest you read up on that process. It is certainly possible but with it comes risk to the seller as you will find if you read about it on here and elsewhere. It seems like you are a little confused about true seller financing and how you can creatively negotiate this deal.
If you want to speak more about this get in touch with me and maybe I can help, I did a lot of research on this for a past deal of mine in MD. There is a ton of sub-2 information on here and some guys who do only that.
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