propertyinvesting100Member@propertyinvesting100Join Date: 2013Post Count: 3
Hi, I am looking to sell my house and have a friend who is showing interest in buying it of me. Except due to his chosen
profession he is unlikely to be accepted by the banks straight away as he often does contract work which means he may work for short periods but make a large sum of money. I was wondering how could he use vendor finance to help him purchase the property and how he would increase his chances of getting a bank loan. I have heard and read about purchasing property for $1. Is this under lease option or a wrap option? Also what kinds of loans or banks would lend money to someone who does not fit banks requirements. He is also good at renovating as he has renovated his own house and worked on other peoples house renovations as a tradie. So I can see that he also has the potential to add value to the property and profit from it in the future. What vendor finance property option strategy would be the best thing to use in his situation and how could he possibly get finance from the bank. He does own his own home but I am not sure if he is willing to put his house at risk to borrow money if it meant he could lose his house if anything went wrong. I assume he would have to put the right legal structures in place to protect himself if he did borrow money. And as for me if he was able to eventually purchase the property what would be the best option contract for me to use, if for example he was not interested in living in it but was interested in finding someone to rent it as soon as he signs an option contract or chose to renovate it for a period of time before renting or selling it on again?TerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
What is best for him probably won't be best for you.
Would you sell a option to him for a $1 for example? Have the property tied up for a long period without any benefit to yourself, other than $1. you could let him take an option over a shorter period and hope he finds a new buyer to sell to, but you could do this yourself.
You could sell it to him on an installment contract, but it may take you 30 years to get all your money.Paul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
Along the lines of what Terry is saying above, one of my rules of business, especially in such an emotional market place as residential real estate, is I don't sell our vendor financed properties to friends.
However if it is worth considering selling the property with vendor finance (VF) to a friend, it's worth considering selling the property on the open market with VF.
A couple of good links to get more knowledge of the two VF strategies you mentioned are:
Rent To Own, i.e. a Lease with and Option – https://www.propertyinvesting.com/strategies/lease-options and
Instalment Contract – https://www.propertyinvesting.com/strategies/wraps
We have a technique where we help to sell properties with VF called negative2positive. The website at; http://www.negative2positive.com.au is a site that promotes our service but it does have a lot of information you could use.