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I made an offer to purchase a $110,000 house subject to a $45,000 1st mortgage with the seller taking a $15,000 2nd and $4,000 cash at closing. The seller is now uneasy about the subject 2 part and wants to retain title with me paying off the 1st and giving them $15,000 when the house sales.
I’m OK with this structure using a recordable option but I am not real excited about putting $10,000 in the house without a deed. Does anyone have a better idea of how to structure this deal?
The seller only needs $4,000 to move and is more interested in the sales price and getting her equity in 1-3 years than receiving monthly income (She was not interested in a cash offer of $57,000)
There’s no guarantee that you’ll be able to get the cash to them in 1 – 3 years. The way the economy is, it could be much longer.
What’s your plan B if you cannot?
Maybe it would be better to just get a 30-day option on the property for $64,000 then market to a retail buyer for $68,000 and keep an option for all or most of the upside.
The advantages:
the seller gets all their money now
the buyer will get a new30 year fixed loan for the $68,000 that you can take over subject to later
the buyer gets to live in a$110,000 house for $68,000 for 3 -4 years.
you get to keep all the upside
you don’t have to come up with any money
you don’t have any property management.
yep – you could probably sell the house fast for $94k but then you’d have to pay taxes on all that profit. It’s better to save the profit for later when you may be able to do a tax free exchange
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