Buying house from private owner, down payment + 60 mos payments????

I am planning on buying or building a house in a year. But a former employer/friend, is selling his home and i have an opportunity to get it. (his dad recently died and inherited his dads land/property/house.)

He is selling $40k below the latest zillow estimate this year. The value of the house/property has increased 64% in the last 9 years. The house is in the area that i was looking to buy. Cuts my drive to work in half, by 20 miles. 1 acre, house sits in middle of property so have basically a 1/2 acre on either side of me with no neighbors....Attached 2 car garage with breezeway, 50 yr old brick ranch, full/finished basement, 1.5 bath, suicide doors throughout, big circle driveway, fireplace, big trees all around, enough land for that 40x60 building....really is just about perfect for me.

I can get this house for $100k. Tentatively, i would give him $25k cash, and make 60 payments of $1000 a month. Remaining balance would be due at the end of the 60 months.

Obviously some legalese stuff has to be done. I have zero idea on what's involved legal wise with a contract, etc....

My biggest concern is what if a tragedy of sorts happens to him?

Anybody have experience with an endeavor like this?

 

Can you borrow the last $75K from a bank, your 401k or your mom?

Something that seems too good. . . and all that shit.

 

Look up land contract. It used to be very common in the midwest..not so much now. My grandparents bought their place on land contract.

Id still get a house inspection and maybe an appraisal...cause if someone wants to pay me what zillow says my house in Woodstock is worth Ill PM them my bank acct info...

 

$100k for an acre of land with a house on it? Out of curiosity, which state do you live in? That's beyond cheap.

 

Secure the services of a real estate attorney. Make the seller do the same, if you wish to stay on good terms.

Don't point out that the seller is bad at math/assessing value. OTOH, maybe it's worth it for him to take the loss and be done with it.

 

One last thing ... title insurance.

 

And make sure zoning, covenants, encumbrances on the property won’t prevent you from building that shop.

 

Lawyer and title insurance and you are fine.

 

Personally, as a real estate agent...this is a bad idea.

Find a way to get the whole 100K and buy it from him outright.

Call a few local real estate attorneys and have them do a title search etc. They can send you a contract for your state and be done.

Interest rates are so cheap right now that you can do a 10 year mortgage for minimal extra cost to you and you avoid a whole shit ton of possible future headaches and gurantee you won't lose a friend over a real estate transaction.

 

Owner financing is very common in multi-unit residential real estate. A local attorney would certainly be your best bet. Your biggest concern should be ensuring you are obtaining a clean title to the property, which any competent attorney should be able to help you assess (or point you in the direction of a title insurance company, or other like resource). Also, a quality inspection will help determine whether you are actually getting a deal or buying a money pit. Although at a $100k purchase price for the underlying property, the cost of decent advisors starts to add up.

 

Some pics......house is 65 yrs old not 50 btw

 

That is a lot of money for a 0sq/ft house.

 

Parents gone.....I hate to take from 401k. I am $77 in debt and was trying to stay debt free until mortgage time in a year.

SW Ohio

The guy has been in business for 25 yrs....concrete construction.....I worked for him on new fire stations, new community centers, etc.....He's well established and well off. He's giving me the deal just 'because'. Like i said, he inherited his dads land/property/house and it is quite substantial. He just doesn't want to go through the real estate agencies and have to fix paint chips on window frames, etc....He's crazily busy and simply doesn't want to fool with the selling process, although he would definitely need to do the legal shit with me and an attorney.

Definitely look into any prohibitive building rules that might be in place.

Home inspection definitely would happen. I paid $700 for a boat survey once, 600 miles away....the boat damn near sank. Lost $700 but saved $30k.

Thanks guys

 

lol 1300 sq to be exact. Im a single guy with a dog. While looking at building new, i was staying under 1400 sq ft. Honestly, i'd be happy with a double wide on 5 acres with a 40x60 garage.

 

only owner finance IF all your credit is maxed/tapped...lol.

 

Oh I totally get it, and couldn't agree more. We are looking to downsize also. We really enjoyed staying in that 2 bedroom apartment while they rebuilt the house.

I just couldn't pass up the opportunity to comment on you having 1 acre, with 1/2 acre on each side of the house.

 

Follow Clemson’s advice.

Regarding your $77k debt, is it high interest? If so, you’re going to have instant equity in the house. Use it to secure a lower interest loan to pay off a chunk of the $77k. Also, with low interest rates, money is cheap to use while you pay off the 77k.

Regarding your comment about paint chips, etc, you can still get an inspection done without any contingencies saying he has to fix stuff. You’ll just find out if there’s anything seriously wrong with it.

 

Why is this a bad idea? I sell owner financed property on a regular basis. Have a lawyer draw up the vendor's lien and promissory note, close at a title company after they do a title search and provide title insurance, and then fulfill your contract obligations.

 

Before rushing to borrow money, get out a calculator and see how long it would take for a low interest rate to offset all of the costs associated with obtaining a bank mortgage.

 

He said 77 dollars in debt. Not 77 thousand dollars in debt.