Re: Think like a bank
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120 000$ cash at closing to the homeowner.
75 000$ seller take back mortgage. Basically he takes back a 2nd mortgage with 0 paymetns and 0 interest. He is willing to wait for his money until we re-sell his house
120 000$ cash will come from a private lender at 7% interest secured by 1st mortgage position at 50% LTV. Did I get the money from the bank? No. Private lender = someone I spoke to getting 3% return on investment from the bank decided 7% secured by real estate is better deal.
Cash from my pocket? 0
Nothing down? Yes, nothing down.
John T Reed can say what he wants to say. There are thousands of people (like me) making deals left and right using none of my own credit or money.
I am going to jail or bankruptcy by doing this?
No. Worse case scenario I make 5-10K, best case scenario deal makes me profit 35K$.
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Sure, I guess if you can 1) convince someone to make a 75k unsecured loan to you at 0% interest and no payments, and 2) find someone with a substantial amount of cash willing to make you a loan for 120k, this strategy works great. AS to the first point, in many states you could be PROSECUTED for this. In many states it is ILLEGAL to target market to foreclosures or to those in risk of foreclosure.
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Seller has a house worth 300 000$
Negotiated down to 260 000$ (damn, is this possible?!)
Seller will accept following terms: 11 000$ cash at closing.
249 000$ 1st mortgage with 800$ monthly payments until we sell the house (omg impossible).
11 000 will come from private lender at 6% interest.
Cash from my pocket: 0
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Here again, you've got to get both seller financing and a substantial amount of private money. I realize that its not impossible to do these things. But as far as walking into a bank w/ this deal, you can forget it. And the vast vast majority of those in preforeclosure won't be in any position to offer you seller financing. In any case, I'm glad that you are able to make such great deals.
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