On Wednesday, I showed the house to the couple who called me about owner financing. They actually live in the same neighborhood and rent right now. They said House #1 is the exact floor plan as the house they are renting, which was great because they liked it. The lady fell in love with the house, which was an added plus. They said their backyard is actually a little bigger than theis house, but they liked the idea that there was no one behind the house (it's just a large meadow). She said if she could, she would buy the house today, which really sounded promising. Of course then the bad news came ... It turns out that their lease isn't up in January - as I had guessed - but in MARCH. Ouch! I told her that that would be a definate problem as 5 months is a long time to hold a house - even if she were to put money down. She talked with her husband with me there and asked if they could afford two payments (which he replied "no"). I told her some landlords are flexible and maybe they could talk to their landlord to see if they could work out an arrangement. She also wanted me to run some figures for her as to what the owner financing may look like. They were interested in full owner financing with 5% or so down. I told her without calculating it that it sounded like the payments would be in the neighborhood of $1,200/mo, which was a little higher than they wanted to pay. Later, I was astonished that my guess was pretty much on mark to what I had figured. I haven't had a lot of time to do different kinds of creative financing, but these are two options I came up which should satisfy their financial situation, while giving me good cash flow:
Option #1
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Sale Price: $145,000
Down Payment: $5,000
Financed: $140,000
1st Year: 30yr @9.25% => $1152/mo
2nd Year: 29yr @9.50% => $1177/mo.
3rd Year: 28yr @9.75% => $1202/mo.
4th+ Year: 27yr @10.0% => $1226/mo.
Option #2
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Sale Price: $145,000
Down Payment: $7,250
Financed: $137,750
1st Year: 30yr @9.00% => $1108/mo
2nd Year: 29yr @9.25% => $1132/mo.
3rd Year: 28yr @9.50% => $1157/mo.
4th Year: 27yr @9.75% => $1181/mo.
5th+ Year: 26yr @10.0% => $1205/mo.
I also got a call from several other people wanting to know what the owner financing entails, but that's all they've asked. Today, though, I got a call from a RE agent who said he has a client interested in it. I called him back and he said the client is his Dad who got divorced recently, and his wife failed to sign over the house, so it got foreclosed. His credit is now dinged with a foreclosure, so he is looking at owner financing. He said he could put down $10,000 (maybe more) and wondered what terms I had. I told him I could work with $10k down, but I was firm on my list price of $145k. I told him we could work out hard numbers on the financing later if he looked at the house and decided he wanted it. He said he would call his client/Dad tonight and call me back with a time to meet.
Lots of other stuff happening - too much to write about. Maybe next week if I have some time, I'll write more.
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