creative financing

Viewing 15 posts - 1 through 15 (of 15 total)

landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 6, 2004 - 8:58 am
Hi,
maybe this should be on another forum but here goes.
There’s a property in our street for sale and the owners desperately need to sell because they’ve moved into a nursing home and need the money. The price has already dropped dramatically to $495 from $625. We’d love to buy it but can’t see any way that we could afford the repayments, or that any lender would give us the money. I figured if there was any way that it could possibly be done, you would be the people to ask.
I know it wouldn’t be a positive cash flow property, but it would certainly be a good investment. In a good market it would easily have reached $650-700.
I hope that someone out there has some crazy idea that may help.
Thanks
Landt.[blink]
westan
Member
@westan
Join Date: 2002
Post Count: 1,950
November 6, 2004 - 11:49 am
hi landt
some ideas off the top of my head
borrow money from you parents and offer them a percent of the profit ?
ask the seller if they will keep 20% of the price in the deal , so that you only need to borrow 80% from the bank and have a 1 year loan with them for 20%.
regards westan
I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
Brisbane 04
Participant
@brisbane-04
Join Date: 2004
Post Count: 215
November 6, 2004 - 6:10 pm
Hi Westan,
Just regarding your comment about the seller keeping 20% in the deal how would you broach this. If a deal like this is accepted, how would you structure it. You would need a solicitor to write it up surely.[biggrin]
Martin
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 7, 2004 - 12:01 am
Hi Westan,
unfortunately only my mum is still alive and she doesn’t have the money to lend me for any investment. I don’t think I could ask the seller either as they need the money for the bond in a nursing home.
Landt
Y
Member
@y
Join Date: 2004
Post Count: 21
November 7, 2004 - 12:15 am
If you post some financial’s..
maybe the Mortgage Broker here couldhelp?
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 7, 2004 - 12:37 am
Hi Y,
IP worth around $320 in a good market
Owe $246 on the IP
Earn $90,000 between us (I earn $60,000 my husband around $20,000), including the income from the IP
Have 2 dependants.
Thanks
Landt.
Mortgage Hunter
Participant
@mortgage-hunter
Join Date: 2003
Post Count: 3,781
November 7, 2004 - 1:31 am
Will you live in the new place or rent it out?
What rent would it achieve?
You are only really sitting at the minimum amount of equity required here.
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985
Todays Hot Rate
***3 year fixed – 6.49%***
Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 7, 2004 - 2:18 am
Hi Morgage Hunter,
we would do a bit of work on it and then rent it out. We could hope to achieve between $350-$400 per week.
Thanks
Landt.
Piper
Member
@piper
Join Date: 2004
Post Count: 22
November 7, 2004 - 11:13 pm
where is the property?
piper
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 8, 2004 - 3:01 am
Mlebourne.
Landt
Mobile Mortgage
Member
@mobile-mortgage
Join Date: 2003
Post Count: 913
November 8, 2004 - 5:10 am
Hi Landt,
Do you have any funds to contribute apart from the equity in your IP?
If you intend to contribute the equity in the IP alone, you will require finance at a higher LVR 95%/100%, If this is the case I estimate (based on your figures) that you may need to include the proposed rental income in order to service/qualify for the required finance.
Regards
Steven
Mortgage Broker
[email protected]
http://www.mobilemortgagemarket.com.au
Ph:0402483216
Ph:1800 820 500
VICTORIA
PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 8, 2004 - 9:37 am
Hi,
thank you all for replies, but I think we’ve come to the conclusion that even though we think it’s a great buy, we can’t afford it. If anyone would like to know where it is, just let me know.
Landt
Renniebros
Member
@renniebros
Join Date: 2004
Post Count: 1
November 8, 2004 - 10:52 am
pay them $550,000 and get them to carry back a second mortgage over a few years. You still get the property at a discount, with no money down and they get a higher price for the house
stuart
landt64
Participant
@landt64
Join Date: 2004
Post Count: 166
November 8, 2004 - 12:02 pm
Hi Stuart,
I’m interested in your comment but I’m not sure how I get them to carry a second morgage.Can you please explain this to me.
Thanks
Landt
mjoz
Member
@mjoz
Join Date: 2004
Post Count: 3
November 8, 2004 - 12:52 pm
Hi Landt,
Essentially a second mortgage means the vendor provides you with vendor finance for a portion of the sale price, and take security against the property via a mortgage. Should you default on repayments, the primary mortgager (your bank) has first dibs on getting their money back from any proceeds, and once they have their money the second mortgager can take their share (if there’s any left). I think that most (all?) banks would also need to approve the presence of a second mortgage.
You end up making two mortgage payments though – so make sure you still end up positive cashflow. If the property is so far below fair value, perhaps you could look at some sort of joint purchase with someone with the aim of doing some minor cosmetic work before settlement and looking to on-sell.
Cheers,
Michael