All Forum Posts by: Jorge Guerrero

What happens if the contract is signed to buy a house for $120,000 but the house only appraises for $105,000. the home is being purchased with a conventional loan. the lender will not lend more than that. but if the sellers decide to back down, and re list the property is another bank going to be willing to loan $120,000 or do they go based on the appraised value even if it is from another other bank.   

this is a residential home. 

I am starting out and have a couple of deals in the works, but am having a hard time really going after the deal because I do not have the money or know of anybody with money. I would like to have and investor with money, that could back me up if he likes what he sees and thinks he will be profitable. 

I stumbled upon a potential deal, for an apartment home 2beds/2.5 baths, 1200sq. The seller lost his good job, and needs to sell his rental property to get his finances together. I can negotiate a purchase price of $120,000 and seller pays all closing cost. 

Why do I think this is a good buy?

The property is worth about $130,000 and has a reliable occupant that pays $950 a month in rent. 

What do I plan on doing with the property?

continue renting for 2 more years, collect $950 in rent for 24 months for a total of $22,800 and than selling for what it appraises 2 years from now. 

What direction am I taking to finance? 

That is what I need advice on, I need to find someone to finance the deal. Im all tied up with another investment property and have no capital to put down. 

Here are both options I plan on offering my potential investor: 

1. take out a 3 year $120,000 loan (my plan is to sell within 2 years, just asking for 3 years so I wont be in a rush or pressured when time to sell) and give $400- $500 interest only payments every month for the entire loan and a balloon payment of the $120,000 after closing. so assuming he/she accepts $500 a month for 24 months, that will be $12,000 in interest, a 10% return on the investment.

2. The second options would be ask for $120,000 and have a joint bank account and all the rent gets deposited to that account, also all expenses will come out of that account for the 24 months and when the home is sold, we would split 50/50 on the profit. I would make all decisions on repairs and necessary expenses for the home to be presentable when time to sell. 

Please let me know what you think. 

@CK Hwang this sounds like a good idea. I just have a question, do you think the due on sale clause would come into play with a lease option? I am new to the real estate investing scene. I read (I believe it was a bigger pockets book) that a lease option could trigger the due on sale clause. or is that owner financing? 

I was talking to one of my friends, and he was telling me how one of his co-worker is going through a tough situation. He owes about 115k on the home, but it is only worth about 85k. Can a real estate investor find a solution to this so everyone wins? How would you approach this?