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Seller is financing land with older manufactured home. No down payment needed. This will give leverage to improve the lot with a dwelling by allowing to have more cash on hand. The catch is the asking price about $30K more than FMV but the seller will knock off $20K at the end of the loan. (Obviously, he is doing it this way to make more money off the interest)
Does this sound reasonable?
Doesn’t sound terrible if you have little or no other options to own something.
Just make sure you use a lawyer and have everything agreed upon in writing.
Nope. I'd never give a buyer equity claims w/o a down payment. It would require the seller to foreclose if they stop paying. I need any buyer doing seller financing to make a sizable down payment to cover my risk.
I think I would hesitate to allow a buyer with no skin in the game to make improvements to the property without approving specific plans.
No clearing, no construction, no liens.
Seller is financing land with older manufactured home. No down payment needed. This will give leverage to improve the lot with a dwelling by allowing to have more cash on hand. The catch is the asking price about $30K more than FMV but the seller will knock off $20K at the end of the loan. (Obviously, he is doing it this way to make more money off the interest)
Does this sound reasonable?
Both the concerns above, indicate risk from the seller's point of view...
As I think you are the buyer, the risk would perhaps be limited (I would verify) to losing your investment if you should default.
What is the term the seller wants to finance for? Is he financing until the whole debt is paid, or does he want an end date with a balloon at the end?
Sometimes the interest rate on these can also be more than the current average interest, but that is often the cost of financing properties like this.
Are you able to do the other improvements without additional financing? Cash? Because with the land holder being a first mortgage, you may have a hard time getting an additional loan.
Last edited by Diana Holbrook; 05-09-2024 at 08:59 AM..
The mobile home is coming with tenants that the seller would like to leave in place. So yes, my son would essentially become a landlord which he would like to persue. This would also cover the entire payment of the mortgage on the land. Once he reaches a certain point, the home will most likely be removed.
My son wants to build a house on the property as well. He has about 2/3 of the cash to do so. He plans on saving up more along the way. He most likely can't get a traditional mortgage since the amount he needs to borrow isn't enough. He will have to get creative with other types of financing. He maybe able to do a construction to permanent loan. The only thing is the seller would like to be the 1st mortgage.
It's get confusing about the financing with the seller but I will try to explain it. He will finance at 6% for 20 years. For the first four years, there will also be a credit given for each payment. The reason he offered this is because his tenant's rent doesn't cover the mortgage payment and he wants to allow for the rent to be raised over the next five years to get there. The monthly credits will total just under $10K over the the four years.
Yes, the attorney will definitely handle the closing and review everything.
Your son should do a title search asap to make sure it's clean before he gets too far in.
Yes, he will during his DD period.
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