Hello, Bp World, I am an investor /agent in Westchester County NY. I have currently been searching passionately for my third investment property off the market. I have been calling ALOT! of FSBO, door knocking, so far I have been close to obtaining an accepted offer via seller financing but have failed each time. Until this last Saturday, I went on an appointment with a seller. The house is a 4 Family. each Apts has 2b, 1b , Building is in C+ condition on a B- Neighboorhood, Each apt needs a completely new kitchen and bathroom, which will cost 10k to 15k for each apartment. WHich will increase rent to $2000 a month for each Apartment.
CURRENT RENT ROOL: Units 1 and 2 are getting 1400 each, the 3rd unit is vacant and the shower is nonfunctional. the 4th unit is currently occupied by the sellers' stepbrother, who has lived there for more than 10 years without paying rent, which is my guess is why the property has not sold , shes been trying to sell the property for more than a year now.
She accepted my offer which I will paste below,
"Our offer is based on the amount of work needed to be done prior to renting the apartments at market value.
We are prepared to offer:
Purchase Price: $460,000
Down Payment : $23,000 (5% of Purchase Price of $460,000)
Interest Rate: 5% = $107,815.60
Monthly Payments: $2,000 x 60 months = $120,000 (Principal & Interest)
Term: 5 Years (60 months)
After 5-year term: Lump Sum Payment of $424,815.60 from refinance with conventional mortgage
Total Sale of Property: $567,815.60
$23,000 – Down payment
$120,0000 – 60 Payments (Principal & Interest)
+ $424,815.60 – Lump Sum Payment
$567,815.60 – Total Payment for Property
Seller financing is the best way I can give her the highest possible price. Which she had allready agreed to, UNTIll HER Financial Adviser said this to her ,
THE SELLERS FINANCIAL ADVISOR BELOW
"At first glance, taking over 10% off the list price is extreme and then they are only offering you 5% down with a balloon after 5 years. If he wants you to hold the mortgage then I wouldn’t take less than 8%-12% interest and 15-20% down. I’m also not a big fan of having a balloon since he is probably going to pay on it for 5 years, collect the rents which will be a lot more than $2000 per month and then sell it in 5 years to pay you off and make money on the back end as well. That being said, I wouldn’t take a balloon mortgage. That just leaves too much to chance. If he balks at the interest rate or that you don’t want to do a balloon then walk away. This is a seller’s market. I don’t know what the market is like in New York but if you think you listed it at a fair price then hold to it for right now. Homes here are going for list price or greater. Personally I think I would send him back LMAO on this offer but that’s just me and I’m a little hard in negotiations. Anyways, that’s my opinion on his offer. I will run the numbers if you want but I can tell you that $520,000 less closing costs of $50,000 nets out to $470,000 and I think that is probably high for closing costs. I am attaching 3 different future value reports showing 5%, 7% and 9% annual returns over 5 years. I used $470,000 as the present value. I did 9% as the high end since your account with me now has earned 9% since we opened it in March. Either way, the numbers are a lot better than what this offer letter is offering. Let me know if you have any questions."
Based on comps the house is located in Wappingers Falls, NY. The market value at its current condition is 480k to 490k based on comps, which this person is in Florida and does not know this market,,, i Dont want to loose the deal, i even drove her to the airport so i can explained my offer in detail,
BP WORLD, how could I counter this?
Thank you in Advance. sorry for my long post
