Free and Clear owners

[Mike Burgess]

Hey guys, a newbie question for ya: I've been mailing to absentee owners in my county with some pretty great response rates. I'm hearing from a surprising number of free and clear owners and I'm wondering if these leads should be handled differently than those with financing on the property. For example, if a free and clear absentee owner calls about a property that is in good shape and is currently rented, do you still go for the 65% less assignment MAO formula, or, since this property would sell to a landlord, should my offer be based
purely on the potential cash flow (i.e. 50% and 2% rules)?

[Bill Gulley]

Originally posted by Andy Jones:

I'm willing to pay more for a property if I can get owner financing with good terms. Many people are just tired of being landlords, if you can give them a monthly payment but save them a headache you may be their knight in shining armor.

Also, it is rare, but if they have owned the property for close to 27.5 years, they will soon lose the ability to deduct for depreciation on their taxes, being able to get into a house where they can claim more tax writeoffs may soon become very important to them.

Andy, you should never pay any more for a property than what is saved by the seller financing, that is in the sale price, don't over pay for a property because it has financing, what you can do is pay a fair price and then pay a higher payment by shortening the amortization, from 30 years to 15 for example. In the old days, you could pay a little more due to appreciation, in a few years you would be back on track, but can't count on that right now, especially if you have a short pop on the balloon! Bill