Alternative to selling

[DavidChien]

Hi there:

My friends are facing a divorce and will have to sell their investment condo in New Westminster ,BC. They bought this 2 bedroom 2 years ago brand new. The tenant has just give notice and the unit is now vacant. Given the time of the year now, the pricing tends to be soft. On top of this, the developer are also selling some of their unsold units which create competition. The numbers are as follow:

Purchase Price $390k + tax == $407k (approx.)
Mortgage: $347,000
Mortgage terms: 15 yrs. amortization & 3.25% variable
Monthly payment $1900
Current market value: $350k to $365k
Potential rent $1450 TO $1500

Since both of them are good friends of mine, I am trying to think of other alternatives to salvage some of the equity. Any suggestions or advice will be much apreciated.

 

[bizaro86]

QUOTE (Davidchien @ Dec 16 2010, 03:52 PM) Hi there:

My friends are facing a divorce and will have to sell their investment condo in New Westminster ,BC. They bought this 2 bedroom 2 years ago brand new. The tenant has just give notice and the unit is now vacant. Given the time of the year now, the pricing tends to be soft. On top of this, the developer are also selling some of their unsold units which create competition. The numbers are as follow:

Purchase Price $390k + tax == $407k (approx.)
Mortgage: $347,000
Mortgage terms: 15 yrs. amortization & 3.25% variable
Monthly payment $1900
Current market value: $350k to $365k
Potential rent $1450 TO $1500

Since both of them are good friends of mine, I am trying to think of other alternatives to salvage some of the equity. Any suggestions or advice will be much apreciated.

If they are interested in doing a creative deal, I would try to extend the amortization of their mortgage to bring the payments down, and then offer it as an assumable mortgage with a low cash requirement, or as an agreement for sale.

A 35 year mortgage of 347,000 at 3.25% has a payment of $1384, month, providing a big monthly savings. One of the numbers in your example must be wrong though, because a 347k mortgage at 3.25% of 15 years has a monthly payment of $2438.

If they could give terms (assumption of 1st mortgage, vendor take back 2nd, agreement for sale, etc) they might be able to get a better price.

Regards,

Michael

 

[DavidChien]

QUOTE (bizaro86 @ Dec 16 2010, 03:19 PM) If they are interested in doing a creative deal, I would try to extend the amortization of their mortgage to bring the payments down, and then offer it as an assumable mortgage with a low cash requirement, or as an agreement for sale.

A 35 year mortgage of 347,000 at 3.25% has a payment of $1384, month, providing a big monthly savings. One of the numbers in your example must be wrong though, because a 347k mortgage at 3.25% of 15 years has a monthly payment of $2438.

If they could give terms (assumption of 1st mortgage, vendor take back 2nd, agreement for sale, etc) they might be able to get a better price.

Regards,

Michael
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Thanks Michael. Given that they are facing a divorce situation, their lawyer will advise them to "cut the cord" . With both on title, will that create confusion in their divorce proceeding?