Rehabber needs note quote!!

[Janine Ayres]

Property newly rehabbed in Las Vegas, Nevada.

1,404 sq. ft. living, 3 bedroom, 2 and 3/4 baths, waterfall and inground spa, 3,700 sq. ft. lot, year built 1984 - effective age less than a year due to rehab. One house with seperate guest quarter entrance. Main portion of house has 2 bed/2 full bath, new kitchen, dining area and living room. Guest portion has open living, dining, kitchenette combo, 1 bedroom and a 3/4 bath. They share a laundry room between the two portions of the house.

New texture & paint in & out. New cabinets, new granite, new 20" tile, new frieze carpet, new appliances, new doors, new plumbing fixtures, new light fixtures, new window blinds, fresh spa - $35,000 spent in rehab.

Intend to sell using Owner Financing. 10% down payment + 2 loans. 1st loan is 75% of purchase. 2nd loan is 15% of purchase. Interest only @ 9.9% monthly payments - 5 year term - balloon of initial loan principal at end of 5 year term. Default rate @ 15.9% if ever over 30 days late. Note with Deed of Trust securing note with the property - Non-judicial foreclosure in Nevada with no right of redemption. Shooting for a buyer with 600 FICO. Intend to sell 1st loan immediately after, therefore = unseasoned. Intend to hold the 2nd note, therefore you will have an interested 2nd lienholder that is local to the property and will take over payments and foreclose themselves in order to save our profit on the rehab.

How much of a discount should I expect to get hit with on the first note?

Thanks for your time & help!!

J9

[Marc Faulkner]

I think the reason why you have not gotten a response is that there are few investors looking for interest only notes at the moment, especially in Nevada, Ca. and Az. Also 620 is the lowest most will go for as far as credit and buying a green note. I would suggest that you create a amortizing loan and up your underwriting criteria for the buyers credit to 620 and build in the ability to service and season this note for at least 3 months to make this attractive to investors in this market.