Carol.... Good luck on this approach. A seller that would consider 100% financing by taking back a 2nd T.D. on a sale "has a fool for a client". The mere fact that it is a hard money loan tells me that financing for the sale is tough. A hard money loan is the worst kind of financing, which is usually at much higher interest rate than conventional financing, with a call date that is usually much shorter than other financing. Many hard moneylenders make this kind of loan to often end up with the asset.
Then add a 35% seller, 2nd T.D. carry back to this transaction and the seller is not only at risk for his carry back, but has a buyer that on a high percentage guess basis is going to default along the loans. While holding the property, this type of buyer may also lower the value of the property through poor management, deferred maintenance, high vacancy and general poor decisions.
I would not entertain this type of transaction under any conditions. With regard to how this should appear on a contract, get a lawyer involved. Getting advice from anyone else on this foolishly leveraged approach is the poorest advice I could provide. Onward and upward Carol..... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: firstname.lastname@example.org
Mar 30, 2011