1. It is still fresh in my mind
2. I am presenting it at NUREIA tonight- so please come if you are reading this on February 3, 2011 (click here for more info)
So here it is:
Indian Camp Road Contract for Deed to Mr. Persistent
SITUATION: Four years ago Chapter Two Realty rescued Mr. & Mrs. Iwanastay by buying their house on a short sale and the leasing it back to them at $1,695 per month and selling them a 3-year option for $10,000 with a sell price of $189,000. Now the house has a market value of $165,000 and the Iwanastays decided to build a new house instead.
THE PROBLEM: Current Market Rents are $1,295 and with management fees and vacancy and repair costs, Chapter Two will lose about $388 a month! Chapter Two owes about $171,000 and selling the house in a traditional sale will mean that they need to bring over $16,000 to closing, which is simply not feasible.
PROPOSED SOLUTION: Chapter Two decided to do a contract sale to get a higher purchase price, reduce transaction fees, and have flexible seller terms to maximize their opportunity. They found Mr. & Mrs. Persistent through a realtor who understands creative financing. The proposed sale price is $179,000 with $11,000 down and a 40 month term with an 8.04% interest only contract sale. The realtor agreed to 1.5% now and 1.5% when the house was refinanced.
BENEFITS: Mr. & Mrs. Persistent are able to buy a house now and fix their credit over the next three years. The receive a mortgage tax deduction and the pride of ownership. The love the house. Chapter Two has a $16,000 swing in cash flow and will end up postive by almost $1,000 when the sale concludes at re-finance. They will have no vacancies, no repairs, and no management concerns for 40 months. They have pre-sign reconveyances in case the buyers don't pay.
REQUIRED DOCUMENTS: Note, Trust Deed, Escrow Agreement, Re-conveyance