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I bought a house on 20 acres to flip. It was a safe bet to purchase.
I have a person wanting to buy it but needs to do a REC for at least 3 months so he can finish the house then apply for a conventional loan. The house still needs the shingles put on, siding and a few other things. He's a builder so it will just cost him materials.
He's already told me all the "stuff" he has which sounds like a life time of collections.
Any nightmare stories to share on owner financing? I've bought my own real estate on REC's but know I'm good for it. I'm reluctant to let someone do a REC with me for fear of the outcome of having to boot them out if they don't make good on it.
I'm considering selling to this person, but if the stories are bad enough, will hold out for cash.
I would care so much about his "collections" as to the details of your financial situation and his. Can you afford to finish this project? If so then do so and sell to whoever has CASH. Why he unable to get CASH? Bad credit? No income? Both? Very important to scrutinize his likelihood of qualifying for a 'regular' mortgage ever. I see some potentially nightmarish litigation if you need to toss him for non-payment and then he slaps liens on the house for the work he has done to finish it. Lots of versions of "two sides to every story"...
It just might be a match made in heaven -- you got into something that you can't finish, he gets into a house that he can make work, but if there is never going to be any income your are never going to get your money back. You can spend money on lawyers now or spend a lot more down the road.
I bought a house on 20 acres to flip. It was a safe bet to purchase.
I have a person wanting to buy it but needs to do a REC for at least 3 months so he can finish the house then apply for a conventional loan. The house still needs the shingles put on, siding and a few other things. He's a builder so it will just cost him materials.
He's already told me all the "stuff" he has which sounds like a life time of collections.
Any nightmare stories to share on owner financing? I've bought my own real estate on REC's but know I'm good for it. I'm reluctant to let someone do a REC with me for fear of the outcome of having to boot them out if they don't make good on it.
I'm considering selling to this person, but if the stories are bad enough, will hold out for cash.
Why not do a contract for deed or lease purchase instead of the owner finance?
It is alot less hassle to get them out if there is a problem down the road.
Give them 12 months on the contract for deed with a monthly payment equal to what you would charge on owner finance, with a ballon payment in 12 months. Just get a nice chunk of change as a down payment. I never do any owner fin. or similar without a nice down payment.
Quote:
Originally Posted by chet everett
I would care so much about his "collections" as to the details of your financial situation and his. Can you afford to finish this project? If so then do so and sell to whoever has CASH. Why he unable to get CASH? Bad credit? No income? Both? Very important to scrutinize his likelihood of qualifying for a 'regular' mortgage ever. I see some potentially nightmarish litigation if you need to toss him for non-payment and then he slaps liens on the house for the work he has done to finish it. Lots of versions of "two sides to every story"...
It just might be a match made in heaven -- you got into something that you can't finish, he gets into a house that he can make work, but if there is never going to be any income your are never going to get your money back. You can spend money on lawyers now or spend a lot more down the road.
We all know there are an abundance of cash buyers out there right now so it should be easy to find one.(The sacrcasm meter should be registering a 10 here).
The reason he probably can't get a mortgage is due to the unfinished condition of the home.
What kind of liens could he put on the house without a signed contract from the keeperk?
I saw a transaction recently where the owner put the property in a trust account with himself as the trustee, arranged owner financing (cash down with a 5 year balloon), then had to foreclose. I'm assuming the DP was enough for carrying costs and/or court costs. Something to ponder...
I could finish the house but choose not to. Easier to sell it cheap, then have to jack up the price for a finished home.
I've priced it $99K for an almost finished 3 bedroom 1100 sq. ft. home on 20 acres with well, septic, phone and electric installed to the home. Borders thousand of acres of BLM. It's endless public lands it's next to, but pretty remote.
He's offered verbally 10K down, he has 5K(not sure that is enough) to finish it so he can apply for a loan. yes I would make sure he could get a loan before I made the deal with him.
My worries are he moves all his stuff in, then does not make good, then I have to boot him out and then the hassles of taking back the property and getting him out.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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You could sell him an option to buy within the time frame you're contemplating for 5K. Charge him rent for the interim. If he fails to complete the work, you've got his option money and a bit of cash from the rent. If he does some of the work, you're a bit farther ahead as well. In my state you would have to file a notice of non-responsibility so you wouldn't get held up on a materialman's lien.
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