Lee Rickey
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I just structured option on a house I just sold where I rehabbed it, sold it to a new buyer. I made a little profit, but I have the option to buy back when they want to sell, 40/60 split of any upside. They got a 30 yr. fixed rate loan for 3.875%. I know they are happy with the deal because they know I sold it to them right and they have equity already ‘in todays market’ from day one.
Just feel out the party you are dealing with. The only thing they can do is say no. What ever you do be upfront and honest, I have found more people are more apt to do business with you if you don’t fluff some big game they have heard from other people.
Very interesting article. You can understand people who are flushing where they live in hart hit markets, especially when credit scores are almost irrelevant right now (and it seems for the near future) for those dealing with institutional financing.
I have not seen rents drop. I just talked to a friend of mine earlier in the week who has around 75 pretty nice homes (rent $995-$1400) He said he has four empty. It seems I have been able to fill my vacancies within 2-4 weeks.
If I create an option, and the option stated something along the lines of “I would be buying back the property at the principle balance owed” back from myself. Wouldn’t this also be a tool that could be used so that if they defaulted (on my note) that I could auto. exercise the option to purchase back. I think this could be a tactic used to get around foreclosing (if they buck on giving up the property) on them if they defaulted on paying my company. Maybe even as a safety net to my buyers. So that they know I will buy it back.
I also have been telling my tenants that if for some reason the arrangement (intallment sale) does not work out, that I will credit them 8-10k toward the purchase of another home (of mine) that will fit their criteria. That way if they do default, they still feel that they have something still out there in way of equity.
What do you think?
Thanks for this post, I am currently looking at my properties and debating what my tax liability will be if I do some of these installment sales with current tenants. I was not a the seminare in Tampa, but this was a question of concern that I have weighing back and forth. I was not aware of this new proposed bill, thanks again to the wealth of knowledge that goes into this site.
When making payments “on sellers behalf” to their bank, do you disguise or setup a different account in which your payment is being made to the bank from?
His payment includes escrow items(tax & insurance)on his loan.Do I need to change or will this matter in regards to his bank paying the escrows? As far as ownership at courthouse being different I am not sure how this plays out. I know that I need to have my own insurance policy, should “seller” be name as mortgage holder? Sorry for all the questions, just want to be prepared if & when these things come up down the line.
Thanks for your help JackieLee
In some of the custom homes I have built the last couple of years, I have installed both wood inserts and pellet stoves. I do know that the pellets have almost doubled in price, (in KY anyway). If you have easy access to getting wood delivered I think it wood be more economical. I personally like a wood burner because it is more rustic, while giving out heat. A pellet stove to me seems more of just a Steam Cooker.
