[Mike Gibson]

Mike Gibson

I have an opportunity to buy a nice 3/2 home with 100% owner financing. There’s enough room in the deal for me to get a down payment when I sell it, but not enough to stay in the deal for a monthly spread. What do you suggest?

[DON WEDE]

DON WEDE

Mike,
Please give us all the numbers so we can take a constructive look at the deal.
Don Wede

[Mike Gibson]

Mike Gibson

House has a mortgage of $102K, which is in line with comps in the neighborhood. Monthly payment is $786, which is right at fair market rental price. With what I’ve done in this area over the last few months, I’m sure I can get $5K down payment. What other figures do you need? Thanks, Don!

[DON WEDE]

DON WEDE

Mike,
Myself I would pass on the deal. To skinny. If you want to do it I would never go into title. I would tell the seller that you can find a buyer for his property quickly. Strike a deal on the down payment with the seller. Also strike a deal on any monthly payment you can get above PITI. Tell the seller you will do the collection of the wrap around deal. You are getting an undivided (X) percent of the wrap around mortgage (the deal you struck). These are your two profit centers down payment and monthly income.
Don Wede

[Mike Gibson]

Mike Gibson

Good advice, Don. I have no intention of going on title on this deal. The strategy that I had in mind was to get an option on the property for the $102K. I would then then, as you suggest, tell the seller that I can find a buyer for the property, quickly. My attorney would take care of the seller financing paperwork between the seller and buyer, and I would get the $5K to release my option. On this one, I just want to GIGOGTOTB (Get In, Get Out & Go To The Bank)! What do you think?

[DON WEDE]

DON WEDE

Mike,
Nothing wrong with that if you can get the seller to agree.
Don Wede

[Mike Gibson]

Mike Gibson

Thanks, Don!

You mentioned not going on title. As I understand it — at least here in Oklahoma — a Contract For Deed for does not put you on title.

As a basic strategy — realizing that each deal is different — which would you rather do:

1. Get an option on a house and then having the seller and the buyer do a Contract For Deed, and releasing your option for a fee, or

2. Get a Contract For Deed with the seller, and then assign your the contract to a buyer so as to collect the down payment and the spread on the monthly?

[DON WEDE]

DON WEDE

You don’t want to be the seller to avoid Dodd Frank issues.

Don Wede

[Jackie Lange]

Jackie Lange

Hey Mike

The only way you should even consider getting an Option on this deal if if it is a fixed rate mortgage with no balloon. You don’t want to set up the “buyer” for a big mess down the road with the monthly payments going up or being forced to refinance for what could be more than the house is worth. Your job is to protect the seller and the buyer.. and make money solving real estate problems. .