Vendor Take Back

[DianneDachyshyn]

We would like to learn how to use VTB when placing offers, but we aren`t too sure how it works. We don`t know how to present the deal, how that affects our calculations and how the banks and lawyers treat the VTB once the offer is accepted. Could some of you who are more experienced in this area help us out?

Thanks,
Dianne Dachyshyn

 

[DaveToynbee]

I have used the direct honest approach from comfree listings and it worked 2 for 2. There can be a few advantages in vtb`s for a seller depending on their situation. In my case, both the sellers were selling owner occuppied townhouses...so you could count out capital gains deferals in the pitch. I explained that I only had 10% to put down, and if they could hold off on 10% of the payment for 1-2 x years with no payments, no interest, I would give them what they wanted, or close to it...thus getting the price they want in this not so hot scary market. Works well in this market blip time. Might as well benefit from others fears while solving their issues.

 

[DaveToynbee]

QUOTE (DianneDachyshyn @ Jun 25 2008, 07:51 PM) We would like to learn how to use VTB when placing offers, but we aren`t too sure how it works. We don`t know how to present the deal, how that affects our calculations and how the banks and lawyers treat the VTB once the offer is accepted. Could some of you who are more experienced in this area help us out?

Thanks,
Dianne Dachyshyn

 

[DaveToynbee]

Trial 3:

banks usually require 10% of your cash in the deal regardless of the amount. Best to Talk to broker about this

lawyers will do all required paperwork as negotiated - register seller loan on title as second motgage.

 

[TommyK]

QUOTE (DaveToynbee @ Jun 25 2008, 09:14 PM) In my case, both the sellers were selling owner occuppied townhouses...so you could count out capital gains deferals in the pitch.

I always thought that owner occupied property can be exempted from capital gain tax. I recently sold a family townhouse and I didn`t get taxed at all. I live in BC. So do we have a different rule here?

I thought VTB works better with investment properties, since the selling can trigger either captial gain or business income. And from Home Study Program CD, VTB from owner occupied property works well when you can offer them a much higher interest (with flexible payment terms). Some sellers may be interested in having that extra monthly cash flow income from the second mortgage. Corret me if I am wrong about this.

 

[DaveToynbee]

No, you`re right. Above, I meant that you wouldn`t pitch the capital gains deferal as it wouldn`t be applicable in an owner occc`d scenerio.

 

[Thomas Beyer]

QUOTE (DianneDachyshyn @ Jun 25 2008, 08:51 PM) We would like to learn how to use VTB when placing offers, but we aren`t too sure how it works. We don`t know how to present the deal, how that affects our calculations and how the banks and lawyers treat the VTB once the offer is accepted. Could some of you who are more experienced in this area help us out?

Thanks,
Dianne Dachyshyn

investing in real estate is a business. It takes time, money and SKILLS. Skills take time to learn, and usually some money to educate yourself using books, tapes, CDs, courses, networks, conferences, seminars .. . Join a group, like REIN, or take a course .. or 7 ...

a VTB is a simple but powerful tool .. write an offer .. add a clause .. simple .. if you know what you are doing.

Don`t expect to get big gains with little skills .. a dentist goes to school for 8+ years .. a car mechanic 2+ years .. a real estate investor ??? 2 minutes ? 2 days ? 2 months ? you can make $100,000`s .. or more .. so INVEST the time and money to learn !

a VTB clause to insert "Seller will grant purchaser a 2nd morgage of XXX $s at YYY % interest per year for up to ZZZ months, fully open, payable at AAA $s per month.
Optional: 1st mortgage to not exceed BBB $s.
Optional 2: 2nd mortgage personally guaranteed by purchaser.

+ cover letter !!

a 2nd mortgage will likely reduce your chances to get a 1st mortgage .. talk to your mortgage broker about it ..

 

[DianneDachyshyn]

QUOTE (thomasbeyer2000 @ Jun 26 2008, 12:14 AM) investing in real estate is a business. It takes time, money and SKILLS. Skills take time to learn, and usually some money to educate yourself using books, tapes, CDs, courses, networks, conferences, seminars .. . Join a group, like REIN, or take a course .. or 7 ...

a VTB is a simple but powerful tool .. write an offer .. add a clause .. simple .. if you know what you are doing.

Don`t expect to get big gains with little skills .. a dentist goes to school for 8+ years .. a car mechanic 2+ years .. a real estate investor ??? 2 minutes ? 2 days ? 2 months ? you can make $100,000`s .. or more .. so INVEST the time and money to learn !

a VTB clause to insert "Seller will grant purchaser a 2nd morgage of XXX $s at YYY % interest per year for up to ZZZ months, fully open, payable at AAA $s per month.
Optional: 1st mortgage to not exceed BBB $s.
Optional 2: 2nd mortgage personally guaranteed by purchaser.

+ cover letter !!

a 2nd mortgage will likely reduce your chances to get a 1st mortgage .. talk to your mortgage broker about it ..

Thanks to everyone for your suggestions, and yes, Thomas, I agree about learning skills. We have been REIN members for one year and have attended three Quickstarts. I have heard much mention of VTB`s but haven`t had it explained well enough for us to feel confident to proceed. The Forum is great for cutting through the fog. Keep those ideas coming!

 

[DaveRhydderch]

QUOTE (DianneDachyshyn @ Jun 26 2008, 07:50 AM) Thanks to everyone for your suggestions, and yes, Thomas, I agree about learning skills. We have been REIN members for one year and have attended three Quickstarts. I have heard much mention of VTB`s but haven`t had it explained well enough for us to feel confident to proceed. The Forum is great for cutting through the fog. Keep those ideas coming!

A good realtor will know how to write a vendor take back into the purchase contract. A good cover letter to the seller is critical, explaining how this could be advantageous to the seller.

I think it was Peter Kinch who mentioned at the last REIN meeting that banks generally don`t like vtb of more than 10% of the purchase price. Something to be aware of and to ask your mortgage broker about.