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This property came to me direct from another investor who is based in Wales. He knew that I was a bit of an expert in these strategies and the lead had come to him somehow via his website for this converted barn in Kent.
The owners were going through some financial challenges in the downturn of the market and a failed business. They had a big (and expensive) mortgage, but wanted to sell up, release their equity, and move on to a rented property
We agreed to do an “Assisted Sale” with them. We found a guy who worked in the city and had lots of cash and a great income, but a very poor credit rating due to some poor decisions in the last 12 months. He came in with a chunk of cash and agreed to babysit the current mortgage payments for a period of 5 years until his credit profile improved and he could complete on the purchase of the house at the agreed price
- The owners agreed to sell on a 10 year Instalment Contract:
- The property was worth £530,000
- The mortgage on this property was £450,000
- The mortgage payments were £3070.00 per month
- We agreed that anything above £550,000 that it was sold for, I would keep
- We sold it for £590,000
- The buyer came in with £100,000 “getting started money”
- I took a £40,000 “fee” for helping both parties
- The owners got £60,000 of their equity straight away with £40,000 invested still in the property, to be released when the transaction completed in the future
- The buyer happily paid the monthly mortgage payment
- Seller very happy to get a big chunk of capital out straight away – and quickly
- Buyer very happy to have the opportunity to buy a property now when they don’t have the credit rating to allow them to get a mortgage. Time will “repair” this credit rating.
- I was very happy to have received a healthy fee for solving two peoples problems.