All Forum Posts by: Duke Marquiss

Write the offer and get it accepted before spending much more time on the deal.  Agent is obligated to write and present any offer that you make.  Agent can't make any decision for the seller.  It is the only way that everyone involved knows what is going on.  Also, you will have more luck selling the first mortgage.  Other things that you can do, is find someone that will buy what is called a partial on the second, say 3-5 years of the payments which is easier than trying to sell the entire second.

Keep on keeping on.  Good luck

Almost all of the closing costs are the commissions.  I have been a Real Estate  broker since 1974 and have sold a lot of property with seller financing.  I always charged more commission than any other brokers in the area but I would take my commission the same as the seller.  In your example, I would take my percentage of commission as money came in, on the down payment and on each payment received.  Most of the sales were 10% commission on vacant land.  Let's say the agent would get $1,200 (if 10%) and each payment would be a little slice to broker.  He could increase his percentage slightly above normal and then agree to the above.  Broker has to get the ok from the managing broker.

The other possible option is to break the financing into a first and second mortgage. Assume $200,000 sales price, $140,000 first, $12,000 down and a second mortgage of $48,000. Find someone that will buy the first or the second mortgage at the table. She has more money, and you have a deal. I structure these type of deals at 6.99% on the first since it is a 70% LTV and ammortize for a long period of time, then I do the second mortgage at 7.99% for a lesser period of time. The buyer for the first is usually a retired individual that is looking for long term higher interest than his bank is willing to pay and it is secured by a real estate mortgage.

The second mortgage, the seller can hold for a period of time, they are familiar with the property, they have gotten the down and the sale of the first so they have money in their pocket and still have an income that is higher rate than they can get at the bank, or you can help find someone that will buy the second for a short time while you get property up and refinanced.  Agent got full pay, seller got property sold and got their money and you got the property.  If brokers would look at the problem in a different way, it would change what they see.

Good luck. 

Years ago, I had a man approach me about being the personal representative of a very wealthy Saudi oil prince and he wanted to loan money out.  Could I use any loans at below market interest rate.   I sent him some deals that I was working on and then he said his guy wanted a bigger slice.  Not of profits, but could I increase the amount to say "Five Million" instead of the $1,000,000.  This was back in the early 80's.  Easy answer, YES!  I had found the mother lode.  "Great, all you have to do is package the deals up and give me $750 for processing fee."  I paid the fee and spent the next two years trying to find the guy.  Just be wary.  It was a great experience and it never happened to me again.  Just a small seminar fee.

I hear that Venezuela may be for sale.  Or congress.

If you are looking at the deal and you are not embarrassed by the price you offer, you are offering too much.  Look at distressed property, either financially or physically, and make an offer that would make most people cry.  I am not saying that you take advantage of the seller, but sometimes a smack of reality is what it takes.  Look for properties that have been on the market for over a year. Look for vacant dated type of deals that have a good location. 

Di-sect the deal.  What would it cost to build that particular building from scratch?  Land acquisition, planning and zoning, plans and specs, contractors (historical costs per square foot to build) and then figure out how to re position the building to fit the current needs in the community.  Look at condo process and if viable, the sum of the parts is greater than the whole. Then, figure out what you want it to look like when you are done, cost it out for the rehab, then make your offer accordingly.  Make your offer for cash, closing in three weeks, no contingencies and no appraisal.  If accepted, find a hard money lender or private money lender that you can either borrow the money or partner with the lender.  Do the work and let the ones with money lay back.  Takes time, but the profits are much bigger than your pain.

Remember, if you find a good enough tree, there is someone to help you climb it.

I recommend reading the book "A Whack on the Side of the Head".  It will make you think differently.

Happy hunting. (By the way, I have followed this model for a number of years and presently own over 40,000 square feet of office space, have over 80 rental doors and 200,000+ square feet of industrial space.  Dead broke 7 years ago.)

Very simple, go to the problem and say, "Sorry, this isn't working out."

Future relationships are important but if it isn't working now, what will it be in the future?

Best of the future for you.

Way to go.  But, don't quit your day job.  It will allow you to do more deals in the future.  I know it is tempting to sit back and live off of the new found income.  Banks like to see the W-2 income when making loans and the extra income is a big bonus.

Find out what seller really wants and needs.  This is not trickery.  Put yourself in their shoes.  Yes they are making 1,200/month now, but they worry about  whether rent is going to come in, they have expenses such as insurance, taxes, maintenance and that occasional excuse from the tenant, "My mom died again!"  Now they have $1,200 they can count on.  By the way, someday you will be in a similar situation and you may want to remember this as a way to sell your property. 

I would try so much down and $1,200 for 120 months and if necessary, a balloon payment  of a negotiated amount at that time.  Low down and -0- interest with a balloon.  We do them frequently to satisfy needs of a seller.

180 months would be $216,000 so that would be the max.  Even if you get hung up for a price, try increasing the payment to say $1,300/month for 120 months.  Every month you watch your principle drop by the amount of the payment.

Mortgage lender will be in first position. You estimate the cost to improve is $300,000. I assume that you have enough for the down and closing costs. Lender makes a construction loan for enough to do remodel plus enough to pay down the seller to a comfort level needed to make the deal work. They look at combined loan to value (CLTV), and their loan to value (LTV). First thing is find a lender and find out if they will make a loan on what you are doing and ask how they would structure the deal. Then go to the seller and negotiate from there.

Without knowing what your cash position is, that is about the only thing I can help you with. 

If I were doing the deal, I would find a hard money lender that buys your plan, and work backwards. ARV is $700,000, times 80%=$560,000, less rehab $300,00= $260,000 and that would be my offer on a cash purchase. Hard money lender will look at a loan of $460,000 or 65% of ARV. You would have to come up with the rest of the money, or about $100,000. Find a portfolio lender that will make a loan on the property after completion and rent up for enough to pay off the hard money lender.

I only would use the 80% figure if I am going to hold for rental, to flip I would use 70-75%. You have to buy your profit up front or you are working for practice.

Lastly, don't fall in love with the deal.  Be prepared to walk away at all times.

Hope this helps.