[Travis Rule]

Travis Rule

I have been pre-approved by FHA for a $185,000 home loan and have actively been looking for a waterfront home for several months now. I live in Cape Coral, FL and this area has been hit hard with foreclosures. Gulf access homes that sold in 2005 for $700,000 are now selling for around $200,000. I have been placing full price offers with my realtor on short sales and foreclosures and keep getting out bid by cash offers. There are many investors starting to buy homes in the area and are paying all cash. This is VERY frustrating! :crazy: I have focused on waterfront because it will be the most valuable when the market comes back.

Today I found a seller that stated he may be interested in carrying the financing for 5 years or so. This is a sailboat access pool home in good condition that appraised for $750,000 in 2005. He currently has it listed with a realtor for $249,000 but says he can cancel the contract at any time. He owes $206,000 with a 30 fixed at 8%. Since I am only approved for $185,000 due to being self employed I would not be able to buy this home with conventional financing or FHA.

I need some help in presenting my offer to him. If he is going to be carrying the financing I’m sure that he will want extra money. Should I offer him a down payment or should I ask him if he could carry the contract for 5 years and make the purchase price somewhere around $240,000? I have $10,000 that I could put down, but would much rather use it to make payments on the house.

I would appriciate any help. Also, I am open to suggestions on how to other financing options and ways to find good deals.

Thanks.
Travis Rule

[Anonymous]

Anonymous

HI Travis

I got your message about 10 pm tonight. I’ll call you tomorrow

You DO NOT want to get bank financing for any real estate deals!!!!! If you can’t buy with seller financing, then don’t buy.

The seller is asking a little above current market value it appears but that’s ok IF YOU GET GOOD TERMS.
HIs interest rate is really high. And you sure don’t want a 5 year balloon unless you can renew for another 5 years and another 5 years. You don’t want to get backed in to a corner. In 5 years the Florida market may now be coming back yet.

The one thing you did not mention is what your exit strategy is for this house. Do you plan to move in? Will you rent it?
You can’t make payments to the seller more than the house can afford.

I need more details before I can advise you.

Jackie