Ed had a problem. His real estate market was just about dead and buried. Nothing was moving anywhere in any price range. He'd just bought a business in my town, but had been unable to sell his free and clear $100,000 residence located 185 miles away. He was fast getting tired of commuting back and forth a couple of times a week. He was extremely motivated and willing to be creative.
The upshot of this was that a departed owner living in Houston accepted the zero interest, zero payment note for his empty house. He had been making $365 per month in mortgage payments on a vacant house for almost a year, and was ready to accept almost any offer that would relieve him of these payments and pay him for his equity. My $90,000 note did just that.
To summarize this transaction, Ed sold his residence to me for nothing down, at 90% of value, with zero interest and payments until the house sold. Using my zero interest, single payment note, he was able to buy another larger residence near his business. In the final analysis, he wound up with a mortgage payment on the new residence that was less than the gasoline and motel bills he'd been paying. The sale of his residence was tax free.
The seller in Houston sold his house, stopped making his payments, and preserved his equity. His equity will be converted to cash when Ed's house sells and I'm paid off. In the meantime, I can continue to collect rent from Ed's house without making any payments or accruing interest.
- We entered into a contract under which I agreed to create one or more zero interest notes totaling $90,000, all of which were to be secured by a first mortgage on his house; and I would name him as the payee.
- The closing of the purchase of his house was to be delayed until I could use my note to purchase an acceptable residence for him and his family near his work.
- Using the MLS computer, I found 5 houses with equities between $75,000 and $100,000 which were vacant, and whose owners had left the area. I offered the $90,000 note to each of the owners, one each day for five days in sequence of the buyer's preference for the homes. I included a disclaimer on the offer that all remaining offers would be voided as soon as any offer was accepted in writing and delivered by FEDEX to me.
The upshot of this was that a departed owner living in Houston accepted the zero interest, zero payment note for his empty house. He had been making $365 per month in mortgage payments on a vacant house for almost a year, and was ready to accept almost any offer that would relieve him of these payments and pay him for his equity. My $90,000 note did just that.
To summarize this transaction, Ed sold his residence to me for nothing down, at 90% of value, with zero interest and payments until the house sold. Using my zero interest, single payment note, he was able to buy another larger residence near his business. In the final analysis, he wound up with a mortgage payment on the new residence that was less than the gasoline and motel bills he'd been paying. The sale of his residence was tax free.
The seller in Houston sold his house, stopped making his payments, and preserved his equity. His equity will be converted to cash when Ed's house sells and I'm paid off. In the meantime, I can continue to collect rent from Ed's house without making any payments or accruing interest.
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