OfflineHello All,
I found a solid 3bed 1bath ranch with half acre lot. Owner is trying to sell himself. He is 80 yrs old. This house was built in 1955 and ALL original. All this guy did was live in it and fix anything that broke. He never remodeled anything. He is asking $114,000 way over priced. Comps are $89,000. Easily needs 25 to 30 K in rehab. I told him what other houses have sold for in excellent shape. (89,000). I think he understood. His wife is deceased and he wants to move South near his sons... This is the offer I'm thinking about: purchase price of 62,000 at 5% interest - 3,000 down payment.(he's very adament about a "down payment". So now it's $59,000.00 I can rehab it cheaply enough to rent out. Rents are $950.00 to $1100.00 for his house. How much "payment do I offer him each month??. He won't tell me what he needs. I want to hold it for 3 to 5 yrs then sell and pay him off. House should be worth about $120K by then. Renters will pay my mortgage to him plus I should have some positive cash flow depending on what he wants as a payment each month. Any thoughts or idea's would be greatly appreciated. We meet tomorrow morning at eleven am. Also, I will ask for a delay in payments of 3 months so I can get the house renter ready. Or 3 months from the day he moves out to go South. Help please!
Debbie
You know you don't have to offer to pay interest. Banks charge interest because money is their commodity, but you don't have to offer it. He's not a bank, he's selling you the property and letting you make payments. Mortgage loans are going for really cheap interest rates right now, less than 5%. Just make sure you cash flow.
He may be adamant about the down payment because he needs the extra money to make a move. That's where you have to find out what works for him and for you. You might want to bring a little proof of other properties that have sold for less to back-up your offer.
An easy way to offer monthly payments is to say $590 a month for 100 months, which is a little over 8 years to pay it off. It still cash flows and in 8 years the house will be paid off (unless you sell it). Don't forget on top of the $590 payment you will have insurance and other expenses if you have renters. Make sure you write into the contract no penalty if you pay it off early.
If he doesn't go for the $62, you could still offer more and do OK, depending on how much work it needs and figure the monthly payments easily in your head. $65 with 3K down leaves $62 for payments. $620/mo for 100 months.
I got this type of offer from one of the workshops I attended.
I know I don't have to offer interest, But I thought it would help my offer to be accepted. I got that idea from one of Deans books. I did forget about the taxes and insurance, Is that paid to him along with my payment or is it paid separately? Can you tell I'm a newbie?..LOL
thanks again,
Debbie
Debbie,
I can't remember in which DG book I read about his deal with an old lady who was adamant about the price that she wanted to sell her house for, even though it was way overpriced... in the end she didn't care how it was paid (length, amount of payments, down payment) as long as a buyer paid the price that her late husband had instructed her to sell for if she ever did.
So basically what I'm saying is that the seller can get either the price or the terms, never both; so if the price is not negotiable, make the terms work for you.
Make sure he adds your name to the insurance, and I would direct all statements (tax bill, insurance, etc.) to come to your address so that you can make sure that they are paid.
Wishing you success,
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
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