All Forum Posts by: Angela Carter

Thank you both.

Scott, I will fully disclose all that is required by the title company and closing attorney. Also, that clause that you suggested "Buyer acknowledges that the Seller is not in physical possession of the Property. In this regard, the sale to be made by this Sales Contract is without recourse to the Seller, and, as between the Seller and the Buyer the sale of the Property is "As-Is, Where Is."..is that a good enough disclosure to the buyer that I am performing a double close?

Louis, I think I'm going to have to make the buyer put up some kind of earnest money to give him reason not to back out. Thanks again.

Scott, I am using transactional funds to close the A-B and the end buyer is paying cash on the B-C. The flash funder will be paid off by the proceeds from the B-C. So, they are two separate closings. I need the clause for the disclosure to the end buyer on the initial contract, any idea?

Louis, yes there are truly two closings here. I think I will take your advice on getting a second opinion from an attorney. That's a great point that you make in the end buyer backing out. I am not requiring an EMD for him as he has agreed to pay cash and I have offered him a very unorthodox deal. I still do need to cover myself adequately in case he does back out. What type of verbiage can I use in the contract to ensure that he doesn't revoke?

I am in the process of selling an REO. My attorney says that NO disclosure is needed for the seller because this is not a short sale. It is none of the banks business what I intend to do with the property once it is sold.

However, I DO have to give a disclosure to the end buyer to let them know that this is a double closing. How is that clause written? I want to include this in my P&S agreement, but I don't want the wording to scare off my buyer. They are going to be buying with cash. I have been told by a title company that the disclosure is done through the HUD-1 settlement sheet however, I have also been told by my attorney that I also need to include such in the contract. I don't want to pay the fee in addition to the closing costs to my attorney if i can find a disclosure/clause on my own that fits just fine.

Does anyone know where I might find this clause? :idea:

Would it make a difference if the borrower told the note buyer that they would be refinancing to pay off the loan by time the balloon is due?

Thanks again.

So 702.06 per month for 60 months and the last payment of 77,259.46 as a balloon. Does this sound attractive for a note buyer?

Jon,

Thank you so much for the math lesson. Learned a lot about Excels functions.

I guess a better way to ask the question would be:

80,000 loan amount
10% int amortized over 30 years
with a balloon in 5 years.
Whatever that balloon balance might be at that point.

Thanks again, for the help!

I have a property that I intend to carry the mortgage for. My exit strategy is to sell this note to a note buyer, so I am trying to write this in a way that they will appreciate.

Here are the numbers. Please tell me if you know how to calculate it?

100,000 purchase price
20,000 down payment
80,000 loan amount
10% interest rate amortized over
30 years
30,000 balloon payment in five years

What is the payment amount for this (not including taxes and insurance)?

Thank you!!!

I am working with a broker who says he can find a buyer for my note using his "go to" REIT firm. I am not keen on using middlemen for something I can do myself.

I want to know where I can find a particularily low key or small REIT firm that has the investors in line (moms and pops) who are interested in buying notes secured by real estate.

This is the way the broker works. He finds RE investors who want to sell their property via owner financing, then finds the potential owner who wants to have a house with a seller carried mortgage. He then gives the RE investo'rs information along with the potential borrowers information to the REIT firm who then shows these potential notes and their ROI percentages to its moms and pops who want to invest their money securely as opposed to IRA's and 401k's.

Now, here's my situation. My fiancé is going to sell me an REO through a double close via transactional funding and is going to make the B-C sale in the form of owner financing. The note buyer is then going to purchase that promissory note which will then pay off the transactional funder. So this is an A-B, B-C and B-D closing, all on the same date.

The broker is assuring me that his "go to" REIT firm has the "investors" lined up to purchase these notes. However, it has been a few days and he hasn't spoken to the firm's manager or even a contact.

I would like to know where I can find one of these REIT's that has investors who are interested in purchasing discounted unseasoned notes for high ROI yields. If there is one then there has to be many more.

If anyone knows, please inform me asap! Thanks.

Jon,

To answer your questions: No, there is not a commission on the second sale. Yes, the rents are correct and actually lower than the areas average rent for units like these and Yes, I have verified* the appraisal amount. Although the appraisal is estimated, I am confident that when a REFI appraisal is done after repairs, it will come in around $125.
It was appraised for $132,000 by the county's appraiser using a 1004 URAR.
The estimated closing costs for the entire transaction came out to be $12k because I was doing an over estimate, just in case.

Transaction funder: 2,500 (min. fee) + 595 proc. fee= 3,095
Note Finder: (1% of purchase price)= 1,000
Commission: 1,800 (first sale)
Closing costs: (3% of 30k + 3% of 100k)= 3,900
Total Costs: $9,795
The other $2k was an over estimate to cover any misc exp.

After six months is when the note would be seasoned according to gudelines. So I would assume I'd be able to REFI at that point. Let me get this right...I have to pay $5,000 in order to complete a rate and term REFI?!? :cry:

That was unexpected. I can supply the income verification to cover the new laon and existing obligations without the rental income counted. It looks like I would run into major appraisal ISSUES on the back end when trying to refi, do they (the new lender) appoint the appraiser or can I reccommend who I'd like to use? This is not the best of areas so the appraiser would easily value this property for less than $127k.

I think it would be worth the challenge considering the end result.

Back to the original topic at hand: Earnest Money Deposit.
This is still the speed bump in the road and I need to find a creative way to supply this to the bank in order to even think about getting to the closing table.

Any suggestions? :idea:

Jon,

The property was a single family and turned into a duplex, it is now legally a duplex. Considering I am also the LLC, the majority of the money being spread around is going to me.
The $12k that seems to disappear is for the estimated total costs to close the deal such as the listing agent's fee, the $3.1k for transactional funding, the closing costs for both the A-B and B-C escrow and attorney services, and the 1% fee for the note finder. I am confident this property is worth at least $100k in its current condition.

The problem with a HML is that the locals require a 10% down payment to secure the loan, as well as proof of good enough income. The old HML's who would supply rehab funds for no money down are obsolete now as they have lost so much $ they have gone out of business.

I would not be in it for a $125k loan as I would be doing a rate and term refi, not a cash out. I would've received a $38k check at the first closing so I wouldn't need to pull more money out, only paying off the note buyer is needed. The payment would be somewhere around $640 (P&I only) for a $95k loan 7% int 30 year fixed. Roughly $840 per month PITI. A positive cash flow of $1160 isn't too bad a deal?

The group of people that I've gathered to close this deal surely are not making out like bandits or taking me to the cleaners. Rather, getting their "cut" just like anyone else would want to. I dont mind paying for their fees because these are reasonable. Once again, I would be leaving the table with a $38.75k check at closing. I'd be happy with that.
I'd have cash in pocket, a positive cash flow and a mortgage that the tenants would pay for. After five years or so when the market returns, I could sell and make another spread.
Does this still not sound like a good enough deal to jump hoops through? :lol: