Gregory Branham
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Jackie, You are too kind.
CHeekin, I like and agree with your last sentence. Selling a piece of this deal would lower your profit margin/safety cushion, which doesn?t sound like what you want. Also, as Jackie noted, bringing in another person would increase the number of interested parties to 4, including the tenant-buyer, which I?ve found is 2 too many most of the time. This deal also hinges on good management to help preserve as much of that monthly $288 as possible.
If you WERE to sell off some of the payments, you would need to create a note and mortgage in second position since they don?t currently exist. If they did exist, you could simply assign the note.
If your monthly payments were $120 to someone that gave you $12,000, you would be paying “interest only” at a 12% rate with no amortization. You could do that for however long you both agreed. However, at the end of that period, you would owe them $12,000 as a balloon payment since none of the principal was paid down.
If you don’t want a balloon, one possibility is you could sell off 54 payments at 12% in exchange for the $12,000, but you’d have to give up all of your current cash flow (plus 68 cents) and you’d be in the hole after vacancy and repairs. $12,000, 54 payments, $288.68 per month, 12%.
There’s an infinite number of possibilities, but you’ve got to pay more than $120 per month if you don’t want a balloon at i=12% and PV=$12,000.
Here’s what’s on the HUD website regarding the status of this act…..hope you feel better soon Jackie.
The Housing and Economic Recovery Act of 2008, signed into law on July 30, 2008 (Public Law 110-289) (HERA), constitutes a major new housing law that is designed to assist with the recovery and the revitalization of America’s residential housing market – from modernization of the Federal Housing Administration, to foreclosure prevention, to enhancing consumer protections. The SAFE Act is a key component of HERA.
The SAFE Act requires the states to have the licensing and registration system in place by: (1) July 31, 2009, for states whose legislatures meet annually; and (2) July 31, 2010, for states whose legislatures meet biennially. For both this 1-year period and 2-year period, HUD may extend the deadline, by not more than 24 months, if HUD determines that a state is making a good faith effort to establish a state licensing law that meets the minimum requirements of the SAFE Act.
I received a message from a tenant yesterday stating they could no longer afford the rent and were moving. I also received a phone call from another landlord last week asking about their rental history. So, I knew they were shopping for another place to live. The husband is working in Florida thus the family is paying rent on two residences. They pay on time and take care of the house.
Today I offered to lower their rent by $200 for 3 months, through February, to entice them to stay, rather than have a vacancy in this slow part of the year. Also told them we would only increase the rent from March through May by $100, then back to thier current rent thereafter. This may give me a vacancy June 1 but it’s much easier to re-rent at that time of year than any other.
We have several houses free and clear that enable us to do this. Good advice.
