Will this work?

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Posted by LP on January 18, 2002 at 13:27:48:

To all you financing wizards - would the following scenario work:

200K Property FMV
180K Asking Price

Financing:
18K 10% Down (received from home equity or hard
money loan)
50K Note in 2nd Position (balloon payment in 5 -
10 years)
130K 1st Mortgage (conventional bank financing -
$112K remaining balance on $180K plus $18K
cash back for payoff of 10% down payment)

Ultimately, the buyer would be paying $0 down and would have low enough payments on the $130K first mortgage in which to generate positive cash flow from renting out the property. The LTV from the 1st and 2nd mortgage would be a respectable 90%. Is this plan of attack reasonable?

For the second mortgage of $50K what sort of terms are out there given the scenario outlined above (assuming buyer's credit, buyer's income level, and property all check out okay). I live in VA if this matters.

Any thoughts would be appreciated!

Regards,

LP

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