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If seller will agree to AFS but wants a larger sum of money to go...30-40k and we takeover payments how do we go about securing this ? Or do we never give this much money ?
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AFS with Money...
- Thread starter CarrieKoch
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QUOTE (CarrieKoch @ Nov 17 2010, 01:32 PM) If seller will agree to AFS but wants a larger sum of money to go...30-40k and we takeover payments how do we go about securing this ? Or do we never give this much money ?
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AfS is a purchase agreement FOR FUTURE SALE .. secured on title like a 2nd mortgage !
it is as good as a second mortgage .. thus enforcable via court of law !
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AfS is a purchase agreement FOR FUTURE SALE .. secured on title like a 2nd mortgage !
it is as good as a second mortgage .. thus enforcable via court of law !
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QUOTE (ThomasBeyer @ Nov 17 2010, 03:06 PM) AfS is a purchase agreement FOR FUTURE SALE .. secured on title like a 2nd mortgage !
it is as good as a second mortgage .. thus enforcable via court of law !
So we can give them a "deposit" of 40k...or is this not advisable ?
it is as good as a second mortgage .. thus enforcable via court of law !
So we can give them a "deposit" of 40k...or is this not advisable ?
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You do not give us an indication of the property`s value, Carrie.
As Thomas points out, and AFS is an agreement to buy the property at a future date, or over time. In many ways it is like an option, or RTO, except that it is a firm contract to buy.
Any agreement that you and the seller think is fair or acceptable should make up your agreement. Do you have the $30K? Is it proportional to the sale price? What are your other terms? How long will it take you to make up the difference? etc etc (I ask those questions rhetorically. No need to answer them publicly.)
In the end, as with an RTO, you want to have $XX contributed to the purchase price. How you get there is by mutual agreement.
As Thomas points out, and AFS is an agreement to buy the property at a future date, or over time. In many ways it is like an option, or RTO, except that it is a firm contract to buy.
Any agreement that you and the seller think is fair or acceptable should make up your agreement. Do you have the $30K? Is it proportional to the sale price? What are your other terms? How long will it take you to make up the difference? etc etc (I ask those questions rhetorically. No need to answer them publicly.)
In the end, as with an RTO, you want to have $XX contributed to the purchase price. How you get there is by mutual agreement.
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QUOTE (CarrieKoch @ Nov 17 2010, 02:21 PM) So we can give them a "deposit" of 40k...or is this not advisable ?
40K might be too high .. or it might be a super bargain !
Give us some more details on property value today, mortgage, value tomorrow, rent levels, location, etc. ..
Do you want to buy my car ? It is only $12,000 !
40K might be too high .. or it might be a super bargain !
Give us some more details on property value today, mortgage, value tomorrow, rent levels, location, etc. ..
Do you want to buy my car ? It is only $12,000 !
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QUOTE (ThomasBeyer @ Nov 17 2010, 07:08 PM) 40K might be too high .. or it might be a super bargain !
Give us some more details on property value today, mortgage, value tomorrow, rent levels, location, etc. ..
Do you want to buy my car ? It is only $12,000 !
$320 value, $40k moving money. Mortgage $350k. Payments $1700/month.
Would do a rent to own per RLG. Payments for this would be around $2400-2720.
So, definitely not a great deal when she needs the 40k. Perhaps I should get her to put a 2nd on the property or a secure HELOC to get her next home.
Give us some more details on property value today, mortgage, value tomorrow, rent levels, location, etc. ..
Do you want to buy my car ? It is only $12,000 !
$320 value, $40k moving money. Mortgage $350k. Payments $1700/month.
Would do a rent to own per RLG. Payments for this would be around $2400-2720.
So, definitely not a great deal when she needs the 40k. Perhaps I should get her to put a 2nd on the property or a secure HELOC to get her next home.
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QUOTE (CarrieKoch @ Nov 17 2010, 08:31 PM) $320 value, $40k moving money. Mortgage $350k. Payments $1700/month.
Would do a rent to own per RLG. Payments for this would be around $2400-2720.
So, definitely not a great deal when she needs the 40k. Perhaps I should get her to put a 2nd on the property or a secure HELOC to get her next home.
Is this a type-o Carrie?
A mortgage of $350k plus $40 down (totaling $390k) does not make a good deal on a $320k property. At least not in my book.
So, presuming you meant a mortgage of $250, you`re looking at a spread of $30k. That`s decent on a $320k property.
But the $40k down would stop me in my tracks. To put that much down, I would be looking for a better deal. And $40 is a LOT of moving money... is she moving to Europe with a family of 12? Tell her you`ll hire the moving van, and pay her legal costs, and put enough for a security deposit in her hands. Anything more than that is not "moving money" - it`s money she wants to pay off her visa with.
... and that`s fine - there`s nothing wrong with her wanting to get that money in her hands (i would too!), but it definitely makes it tougher for you to buy.
But - in answer to your original question, I would not make it a deposit, but an amount that she gets at `closing` of the deal. Note, as per Thomas, this is not the true closing of the deal, since that`s a future date as defined in the AFS, but rather I mean the date that *beneficial ownership* (as opposed to legal ownership) transfers to you when you get the keys. This would be recorded on the offer as something like `additional funds`.
Thanks,
David.
Would do a rent to own per RLG. Payments for this would be around $2400-2720.
So, definitely not a great deal when she needs the 40k. Perhaps I should get her to put a 2nd on the property or a secure HELOC to get her next home.
Is this a type-o Carrie?
A mortgage of $350k plus $40 down (totaling $390k) does not make a good deal on a $320k property. At least not in my book.
So, presuming you meant a mortgage of $250, you`re looking at a spread of $30k. That`s decent on a $320k property.
But the $40k down would stop me in my tracks. To put that much down, I would be looking for a better deal. And $40 is a LOT of moving money... is she moving to Europe with a family of 12? Tell her you`ll hire the moving van, and pay her legal costs, and put enough for a security deposit in her hands. Anything more than that is not "moving money" - it`s money she wants to pay off her visa with.
... and that`s fine - there`s nothing wrong with her wanting to get that money in her hands (i would too!), but it definitely makes it tougher for you to buy.
But - in answer to your original question, I would not make it a deposit, but an amount that she gets at `closing` of the deal. Note, as per Thomas, this is not the true closing of the deal, since that`s a future date as defined in the AFS, but rather I mean the date that *beneficial ownership* (as opposed to legal ownership) transfers to you when you get the keys. This would be recorded on the offer as something like `additional funds`.
Thanks,
David.
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QUOTE (DavidSandbrand @ Nov 18 2010, 12:23 AM) Is this a type-o Carrie? A mortgage of $350k plus $40 down (totaling $390k) does not make a good deal on a $320k property. At least not in my book.
So, presuming you meant a mortgage of $250, you`re looking at a spread of $30k. That`s decent on a $320k property. But the $40k down would stop me in my tracks. To put that much down, I would be looking for a better deal. And $40 is a LOT of moving money... is she moving to Europe with a family of 12? Tell her you`ll hire the moving van, and pay her legal costs, and put enough for a security deposit in her hands. Anything more than that is not "moving money" - it`s money she wants to pay off her visa with. ... and that`s fine - there`s nothing wrong with her wanting to get that money in her hands (i would too!), but it definitely makes it tougher for you to buy. But - in answer to your original question, I would not make it a deposit, but an amount that she gets at `closing` of the deal. Note, as per Thomas, this is not the true closing of the deal, since that`s a future date as defined in the AFS, but rather I mean the date that *beneficial ownership* (as opposed to legal ownership) transfers to you when you get the keys. This would be recorded on the offer as something like `additional funds`. Thanks, David.Typo - mortgage 250. Moving money - down payment on another houseI think its a lot to and I have a handful of other deals, but this could also be profitable, just want to make sure I protect the 40k and that we get a good return. I`d rather have her Heloc it or 2nd mortgage and make those payments - but than not sure if that throws off her ratio for a 2nd house.
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QUOTE (CarrieKoch @ Nov 17 2010, 10:35 PM) Typo - mortgage 250. Moving money - down payment on another houseI think its a lot to and I have a handful of other deals, but this could also be profitable, just want to make sure I protect the 40k and that we get a good return. I`d rather have her Heloc it or 2nd mortgage and make those payments - but than not sure if that throws off her ratio for a 2nd house.
I am trying to follow it.
Property current estimated market value: $320K (based on whose estimate?)
40K down is a 15% down payment or so, but you do not get the property right away because it is an AFS for what final purchase price? and how long out?
Mortgage (how long and a favorable rate?) $250K
Basically this deal seems to save the seller (and hopefully you as well) some Realtor commissions and provides the seller the opportunity to buy another place. Good but how much upside do you have?
This deal sounds kind of contorted so is it worth all the trouble? Couldn`t you save the realtor commission by just buying the place outright? or by maybe buying another place entirely? I know 320 minus 290 is $30K apparent profit (assuming you buy it for today`s price) but for how much trouble?
Really, if you jump through all these hoops you should be able to tabulate for yourself what the benefits are. Then ask yourself if there is an easier way to make such profits. When your conclusion is that this is truly the deal of the century go for it. Otherwise it may not be worth the trouble.
This reminds me of my great air fare savings scheme. I had to teach a course in Indonesia and thought that I could save airfare by using the opportunity to first vacation some time in Holland by buying this around-the-world tickett. Well, the tickett turned out to be a lot more expensive - so I decided to go on vacation in Holland anyway but to fly back to Vancouver and then on to Korea for the connection to Jakarta. Of course flying time was so long, I would need to stay in Vancouver in a Hotel. The vacation in Holland was including my wife and kids, who would have to fly back on their own to Calgary (but my youngests was only 3 years old and a handful for my wife alone in the plane). Also, I would have to shorten the Dutch vacation by a day (the rest of the family would fly back to Calgary the next day, otherwise I couldn`t make the cheap flight. And... well you get the drift.
So how much was the ultimate savings? Well it was of course more than if we just had a simple quiet vacation in Holland a few months before or after the course in Indonesia. Oops, and we forgot to include the costs of 2 nights in a cheap and miserable Vancouver Hotel (because of the back and forth I also mixed up the time and date differences so it was 2 nights instead of one). KISS definitely comes to mind.
In Real Estate the same is true. Just a thought.
I am trying to follow it.
Property current estimated market value: $320K (based on whose estimate?)
40K down is a 15% down payment or so, but you do not get the property right away because it is an AFS for what final purchase price? and how long out?
Mortgage (how long and a favorable rate?) $250K
Basically this deal seems to save the seller (and hopefully you as well) some Realtor commissions and provides the seller the opportunity to buy another place. Good but how much upside do you have?
This deal sounds kind of contorted so is it worth all the trouble? Couldn`t you save the realtor commission by just buying the place outright? or by maybe buying another place entirely? I know 320 minus 290 is $30K apparent profit (assuming you buy it for today`s price) but for how much trouble?
Really, if you jump through all these hoops you should be able to tabulate for yourself what the benefits are. Then ask yourself if there is an easier way to make such profits. When your conclusion is that this is truly the deal of the century go for it. Otherwise it may not be worth the trouble.
This reminds me of my great air fare savings scheme. I had to teach a course in Indonesia and thought that I could save airfare by using the opportunity to first vacation some time in Holland by buying this around-the-world tickett. Well, the tickett turned out to be a lot more expensive - so I decided to go on vacation in Holland anyway but to fly back to Vancouver and then on to Korea for the connection to Jakarta. Of course flying time was so long, I would need to stay in Vancouver in a Hotel. The vacation in Holland was including my wife and kids, who would have to fly back on their own to Calgary (but my youngests was only 3 years old and a handful for my wife alone in the plane). Also, I would have to shorten the Dutch vacation by a day (the rest of the family would fly back to Calgary the next day, otherwise I couldn`t make the cheap flight. And... well you get the drift.
So how much was the ultimate savings? Well it was of course more than if we just had a simple quiet vacation in Holland a few months before or after the course in Indonesia. Oops, and we forgot to include the costs of 2 nights in a cheap and miserable Vancouver Hotel (because of the back and forth I also mixed up the time and date differences so it was 2 nights instead of one). KISS definitely comes to mind.
In Real Estate the same is true. Just a thought.
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I think I would be walking away from this one. The 40k out is too steep for the spread. Get her down to 10-15k and you might be able to justify. What we she sell the home for if you cash her out today? How long has the home been on the market? What methods has she used to sell her home? Was she going to port her mortgage into a new home?
The last number of months finding tenant/buyers has been a very long process. Will this home cash flow with as a rental?
The last number of months finding tenant/buyers has been a very long process. Will this home cash flow with as a rental?