VTB`s

[MarkTorgerson]

I found a property that a motivated vendor is willing to do a VTB. Puchase price approx $200,000 and he is willing to carry $25,000. It seems that most banks and/or realtors are still uneducated about VTB`s and don`t want them as part of the offer. I have done some VTB`s before but had to put them on another property I had that had enough existing equity. Does anyone have any example of how exactly they write up a VTB on an offer and if anyone else is having the same problems as I am. I was at the Quickstart over the weekend and it seemed that VTB`s are put directly on the offer and the banks still approve it.

Thanks
Mark Torgerson

 

[Peter]

QUOTE (Torg @ Oct 22 2007, 04:29 PM) I found a property that a motivated vendor is willing to do a VTB. Puchase price approx $200,000 and he is willing to carry $25,000. It seems that most banks and/or realtors are still uneducated about VTB`s and don`t want them as part of the offer. I have done some VTB`s before but had to put them on another property I had that had enough existing equity. Does anyone have any example of how exactly they write up a VTB on an offer and if anyone else is having the same problems as I am. I was at the Quickstart over the weekend and it seemed that VTB`s are put directly on the offer and the banks still approve it.

Thanks
Mark Torgerson

Hi Mark,

You are correct, there are many banks that do not really understand a vendor takeback and therefore will not allow them. There are however many banks and brokers that do and if it is packaged and presented correctly to the lender, even conventional lenders with fully discounted rates will allow them often up to as high as 90% of the purchase price of the property.

The loan to value that will be allowed with the vendor take back will depend on your application, the location of the property and the lender that you are working with. If there is to be a VTB in place, it is important that is part of the offer as full disclosure in financing is very important and should not cause any challenges or complications if you are working with a lender or mortgage broker that is familiar with the needs and strategies of real estate investors.

Thanks, Rebecca (for Peter Kinch)

 

[MarkTorgerson]

QUOTE (Peter @ Oct 22 2007, 06:41 PM) Hi Mark,

You are correct, there are many banks that do not really understand a vendor takeback and therefore will not allow them. There are however many banks and brokers that do and if it is packaged and presented correctly to the lender, even conventional lenders with fully discounted rates will allow them often up to as high as 90% of the purchase price of the property.

The loan to value that will be allowed with the vendor take back will depend on your application, the location of the property and the lender that you are working with. If there is to be a VTB in place, it is important that is part of the offer as full disclosure in financing is very important and should not cause any challenges or complications if you are working with a lender or mortgage broker that is familiar with the needs and strategies of real estate investors.

Thanks, Rebecca (for Peter Kinch)


Thanks, Rebecca.
I think half of my issue has been using the wrong mortgage broker. Do you know where I can find some solid examples of VTB`s in offers to purchase?
I will be giving your office a call later this week once I orgainze my properties. I have a good sized portfolio that I would like to move over.
Mark

 

[jeremyfleming]

QUOTE (Torg @ Oct 23 2007, 09:27 AM) Do you know where I can find some solid examples of VTB`s in offers to purchase?
Hi Mark,
I am no stranger to VTBs, so perhaps I could help? I am just not sure what you mean by the above question - can you clarify for me??

Cheers,
Jeremy

 

[MarkTorgerson]

QUOTE (jeremyfleming @ Oct 23 2007, 10:22 AM) Hi Mark,
I am no stranger to VTBs, so perhaps I could help? I am just not sure what you mean by the above question - can you clarify for me??

Cheers,
Jeremy


I am mainly looking for exactly how one would be written out on the offer to purchase?? Seller has agreed to a 2 year term, interest only, 6%.
I have never written one out on an offer to purchase and was wondering the proper way to do it or the best wordage. Most realtors on the seller`s side get scared off right away because they don`t understand them.

Thanks
Mark

 

[jeremyfleming]

Perfect!



I thought that's what you meant......



Fill in the blanks and away you go - be sure to add onto your "terms of sale" in the Purchase agreement, that this "Vendor Finance Schedule" is indeed a term of sale.



Hope that helps. Let us know how you make out!



Jeremy

 

[MarkTorgerson]

QUOTE (jeremyfleming @ Oct 23 2007, 04:35 PM)
Perfect!



I thought that's what you meant......



Fill in the blanks and away you go - be sure to add onto your "terms of sale" in the Purchase agreement, that this "Vendor Finance Schedule" is indeed a term of sale.



Hope that helps. Let us know how you make out!



Jeremy




Thanks Jeremy

I appreciate your helpful input.

Mark

 

[DianeLeahy]

QUOTE (Torg @ Oct 22 2007, 07:29 PM) I found a property that a motivated vendor is willing to do a VTB. Puchase price approx $200,000 and he is willing to carry $25,000. It seems that most banks and/or realtors are still uneducated about VTB`s and don`t want them as part of the offer. I have done some VTB`s before but had to put them on another property I had that had enough existing equity. Does anyone have any example of how exactly they write up a VTB on an offer and if anyone else is having the same problems as I am. I was at the Quickstart over the weekend and it seemed that VTB`s are put directly on the offer and the banks still approve it.

Thanks
Mark Torgerson


Hi Mark,
How did you know that your motivated vendor wanted to do a VTB? other then asking to do one He/She new what a VTB is? It must scare some people away from a deal?? I have never used this option or understood the term myself. I am just trying to learn. Now, this counts as a second mortgage ? with better advantages? Thanks for your time.

 

[MarkTorgerson]

QUOTE (dymark @ Oct 25 2007, 12:01 PM) Hi Mark,
How did you know that your motivated vendor wanted to do a VTB? other then asking to do one He/She new what a VTB is? It must scare some people away from a deal?? I have never used this option or understood the term myself. I am just trying to learn. Now, this counts as a second mortgage ? with better advantages? Thanks for your time.

Yes it is like a second mortgage with the seller carrying a portion of the financing. VTB = Vendor Take Back.
I generally find this out verbally first and will often pay a little more for the property as you are getting in for lower cash down.
Yes it does scare most sellers but I think it has to do with how it is presented which I am also trying to improve upon. If the seller doesn`t want to do a VTB, I usually just try to come from a different angle if the numbers prove up.
Mark

 

[Lorie]

I realize that this is an 'old' discussion (2007!!), however, just wanted to ask: A VTB can then be used as part of your down-payment? As long as it is affordable with the property's cash flow, do most financial institutions accept/approve of VTB's?

 

[smmcguire]

That's a good question for your mortgage broker, or ask a few different ones.



As for the acronym VTB. This is being replaced with STB in most if not all jurisdictions in N.Am. Most Purchase and Sale Agreements reference Sellers and Buyers as apposed to Vendors and Purchasers. Some areas have yet to switch, but they will.



An example of an STB (basic) no options like pre-payment attached.



The seller agrees to take back a __________ charge/mortgage in the amount of___written amount_______ ($_no. amount__), bearing interest at a rate of no. amount % per annum,calculated semi-annually not in advance,repayable in blended monthly payments of written amount ( $ no. amount ), including, both principle and interest, and to run for a term of (no. amount ) years from the date of completion of this transaction.



This would be located in the schedule portion of a contract.



Note : This is only for the purpose of example and is not to be used without the direction of your legal council.