Finally! Got closed on my second deal!

10 Replies

Hey all!

I've been in the middle of a 4 SFH deal for months now, dealing with multiple banks, more crap than I care to remember, etc, etc. I cared about this deal because after it's all said and done, for my $32,000 + closing costs, I'll be earning around $1,700 per month net. I currently own 2 rentals (Sold one a few weeks ago to pay for this deal), and this was going to be my "catalyst" deal. At the moment, I'm earning around $500 a month net across both rentals I currently own. Respectable numbers by any measurement. If I had rolled my profits into another downpayment for my next place, it was going to take me quite a while (more than a year, not quite 2).

This deal brings my total net profits to around $2,200 per month, dropping my projected income replacement day by almost 2 full years!

This journey has been VERY trying at times.

My first commercial bank got bought out and would no longer loan to out of state investors.

My second bank wanted 25% down, plus 6 months worth of reserves for the properties, plus 6 months worth of reserves for my other properties, plus 6 months worth of reserves for my primary residence (even though it was a commercial loan), plus 6 months worth of my credit card payments, plus the tax returns of the seller, plus the lease agreements with the current tenants.

A third broker I was dealing with didn't understand for some reason I wanted it to be a commercial loan even though I repeatedly told him so.

A fourth banker finally got it, was responsive, and reasonable. They are the bank I'm using.

Finally got paperwork in today, signed, notarized, and sent off to FedEx about 2 hours ago.  As of tomorrow, this deal is done, closed, and I get my first rent payment on Saturday.  The houses are fully occupied.

So, all in all, it sucked at times, but with perseverance, it'll be worth it!

Originally posted by Michael S.:

Congrats on the second deal. Persistence really pays off. 

 Indeed!  I had so many obstacles in this deal, I started to have doubts.  It's easy to say "Hey, I got $35k in my account, I could pay off everything and have zero debt", but then I'd have no income from the investment.  My friends either think I'm nuts, or they all of a sudden want to hitch their wagon to mine.  :)

Originally posted by @Travis Beehler :


My second bank wanted 25% down, plus 6 months worth of reserves for the properties, plus 6 months worth of reserves for my other properties, plus 6 months worth of reserves for my primary residence (even though it was a commercial loan), plus 6 months worth of my credit card payments, plus the tax returns of the seller, plus the lease agreements with the current tenants.

I had that exact experience when trying to buy my third property. They wanted a ridiculous amount of documentation, and huge reserves. I was trying to buy a $170,000 four plex and they wanted me to have nearly $65,000 cash to get a loan.

Originally posted by @Anthony Gayden :
Originally posted by @Travis Beehler:


My second bank wanted 25% down, plus 6 months worth of reserves for the properties, plus 6 months worth of reserves for my other properties, plus 6 months worth of reserves for my primary residence (even though it was a commercial loan), plus 6 months worth of my credit card payments, plus the tax returns of the seller, plus the lease agreements with the current tenants.

I had that exact experience when trying to buy my third property. They wanted a ridiculous amount of documentation, and huge reserves. I was trying to buy a $170,000 four plex and they wanted me to have nearly $65,000 cash to get a loan.

 US Bank?  Because that's exactly what they were wanting.  $160k deal, $65k cash to get the loan.

Originally posted by @Travis Beehler :

 US Bank?  Because that's exactly what they were wanting.  $160k deal, $65k cash to get the loan.

 No it was Bank of America. I literally hung up on the loan officer when I heard that ridiculous amount. I should mention that I have earnings of over $100,000/yr and my credit score is over 800. I called the bank thinking I was a shoe-in for a loan because I had $40,000 cash, and wanted to put 20% down. Apparently I am just too much of a risk. 

The good news is that because of that, I stepped out into the world of creative financing, and am now buying the property via owner financing.

Originally posted by @Anthony Gayden :
Originally posted by @Travis Beehler:

 US Bank?  Because that's exactly what they were wanting.  $160k deal, $65k cash to get the loan.

 No it was Bank of America. I literally hung up on the loan officer when I heard that ridiculous amount. I should mention that I have earnings of over $100,000/yr and my credit score is over 800. I called the bank thinking I was a shoe-in for a loan because I had $40,000 cash, and wanted to put 20% down. Apparently I am just too much of a risk. 

The good news is that because of that, I stepped out into the world of creative financing, and am now buying the property via owner financing.

 Nice!  You're EXACTLY where I was when I went into this deal.  Over 100k a year, 818 credit score, $51k in cash, and 25% down.

How has owner financing been treating you?  Have you been able to find lots of people who are in a position to do that?  How do you find people who can do owner financing?  What are the terms you typically use?  Feel free to PM me that if you don't want to share publicly. :)

Thanks!  Have a good weekend!

Originally posted by @Travis Beehler :

 Nice!  You're EXACTLY where I was when I went into this deal.  Over 100k a year, 818 credit score, $51k in cash, and 25% down.

How has owner financing been treating you?  Have you been able to find lots of people who are in a position to do that?  How do you find people who can do owner financing?  What are the terms you typically use?  Feel free to PM me that if you don't want to share publicly. :)

Thanks!  Have a good weekend!

 Oddly enough, there are more people willing to do owner financing than you would think. Other investors who own their properties outright really like the idea. I have found that the easiest way to find these deals is simply by asking everyone. I have looked at three other properties recently, and 2 out of those 3 were willing to do owner financing, but I had to ask to find out. 

The terms I am using for the deal I have now are 20% down (he was willing to do 10% down at a higher interest rate), 30 year amortization, 5.5% interest and a 5 year balloon (he was willing to do 10 years, but at a higher interest rate).

Originally posted by @Anthony Gayden :
Originally posted by @Travis Beehler:

 Nice!  You're EXACTLY where I was when I went into this deal.  Over 100k a year, 818 credit score, $51k in cash, and 25% down.

How has owner financing been treating you?  Have you been able to find lots of people who are in a position to do that?  How do you find people who can do owner financing?  What are the terms you typically use?  Feel free to PM me that if you don't want to share publicly. :)

Thanks!  Have a good weekend!

 Oddly enough, there are more people willing to do owner financing than you would think. Other investors who own their properties outright really like the idea. I have found that the easiest way to find these deals is simply by asking everyone. I have looked at three other properties recently, and 2 out of those 3 were willing to do owner financing, but I had to ask to find out. 

The terms I am using for the deal I have now are 20% down (he was willing to do 10% down at a higher interest rate), 30 year amortization, 5.5% interest and a 5 year balloon (he was willing to do 10 years, but at a higher interest rate).

 Ah nice!  Yeah, most of the places I look (Zillow, mls, etc.) if they advertise seller financing, the place is usually a dump with bullet holes in the walls and blood stains on the carpets. :)  I think I might just give that a try!  Thanks!

Originally posted by @Travis Beehler :
Originally posted by @Anthony Gayden:
Originally posted by @Travis Beehler:

 Nice!  You're EXACTLY where I was when I went into this deal.  Over 100k a year, 818 credit score, $51k in cash, and 25% down.

How has owner financing been treating you?  Have you been able to find lots of people who are in a position to do that?  How do you find people who can do owner financing?  What are the terms you typically use?  Feel free to PM me that if you don't want to share publicly. :)

Thanks!  Have a good weekend!

 Oddly enough, there are more people willing to do owner financing than you would think. Other investors who own their properties outright really like the idea. I have found that the easiest way to find these deals is simply by asking everyone. I have looked at three other properties recently, and 2 out of those 3 were willing to do owner financing, but I had to ask to find out. 

The terms I am using for the deal I have now are 20% down (he was willing to do 10% down at a higher interest rate), 30 year amortization, 5.5% interest and a 5 year balloon (he was willing to do 10 years, but at a higher interest rate).

 Ah nice!  Yeah, most of the places I look (Zillow, mls, etc.) if they advertise seller financing, the place is usually a dump with bullet holes in the walls and blood stains on the carpets. :)  I think I might just give that a try!  Thanks!

Most people selling on the MLS probably wouldn't want to do owner financing. Most of what i have seen is being sold at retail, and a lot of it had exaggerated income. A lot of the stuff in Phoenix was bought, 1 or 2 years ago, no improvements were made, and now they are trying to sell for $50-60,000 more than they paid. I guess they are targeting Californians who don't know any better and think those are good deals.

Of the last two deals I have done, one was a pocket listing from an agent, and the other, I got by just telling a neighboring landlord that I was interested in buying.

A lot of what we hear on this site is true, most deals aren't on the MLS. Also you will have to get creative with financing unless you are already wealthy, or buying extremely cheap properties.

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