Some may remember the late 70's, early 80's when interest rates were in the high teens and low 20's. The country was in recession and there just wasn't cash in deals. So we go creative.
Thank goodness for that experience. I just helped a seller get out from under a rental he owned and a buyer to get into their first home by recalling some of that old experience.
The seller owned the property free and clear, but lived 800 miles away and was tired of low rents, vacancies and repairs. We had tried to sell it, but the market was below acceptability. The tenant has been at the same job for the past eight years, mad good money, but because of medical collections just were not financable. The perfect storm was bout to come together and make both parties happy.
For the seller: he transfered the liability of the property to the Buyers, retains a security interest in the property, obtained his asking price, and created a monthly income much higher than rent.
For the Tenant: They don't have to move any more, can put sweat equity into the property and keep it, save a ton in closing costs, and make monthly payment that is managable.
Downside: In three years the balloon payment will come due and the tenant/buyer will need to get financing or talk the seller into extending it another period.
Over the past several years with financing so free and easy some of these old tools laid rusty in the bottom of the tool box. Now we must get them out and clean them up if we are to be most effective to our clients.
I love selling Nampa, ID real estate.
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