Acting as a bank

Buying & Selling Real Estate
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Acting as a bank

Daniel Peavey
Atlanta, GA · Member since 2014 · 220 posts · 109 votes

What do fellow investors think of selling investment property that is paid for 100 percent.

Acting as bank.  30 years of payments.  What are costs associated with foreclosing process.

What are other benefits and pitfalls

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Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
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The ability to get financing has everything to do with value. Take away financing and watch property values plummet. What happened to values when interest went to 13% for mortgages?

Our economy is based on credit. Take credit away and values collapse.

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  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    11y

    This is a fun thread, ethics and "predatory"

    From @Bill Gulley 

    Predatory will generally be when the screwed had less knowledge than a prudent person or was unaware of unfair tactics, methods or conditions, that or they were misled, deceived or just plain cheated.

    @Jay Hinrichs another subject - master lease w option - you wanted a contract on master leases 

    https://reiskills.wistia.com/medias/b8npgex8av

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    Sounds eerily like the tactics banks have been using against their borrowers for the last 100+ years. Finally, something we can agree on!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Guy Gimenez 

      Not sure I am 100% there with you on the banks Guy... I would agree with on the sub prime mortgage lenders like Ocwen et al... and some of the majors.

    But local community banks like the one I use here in Oregon are the life blood to the community and are FANTASTIC if you don't bank with a community bank your missing the boat.. sometimes you need a BOA account or WELLS but I would never bank with them other than by necessity.

    Now for many getting started in the RE bizz like we see here on the BP site bank financing is a long way off vis a vi a commercial line... But for those that have the Character Credit and Capacity its the only way to go.

    How can you argue with 5 to 6% money @ 90% of cost... ?  Ya you need an appriasial and it takes 2 to 3 weeks ..

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  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    11y

    To answer Daniel, I have only financed a family member. I have considered selling with owner financing, financing mainly because 1) I have no where to put the money of a sold property. But 2) I only like today's interest rates very short term. And 3) I don't like losing control of the property. and 4) Owning is an inflation hedge whereas financing the purchase, unless possibly an ARM, is not. So even though the market's height makes me want to sell I am holding.

    Someone told me he paid about 2.5k to the bank in attorney fees to get his house out of foreclosure.  If true, and it sounds reasonable, a bank pays about 2.5k for one of those foreclosure mill attorney offices to get all the way to posting a foreclosure at the courthouse in Texas which is non-judicial and has a pretty quick timeline.  Another real cost is holding costs while not being paid and damages to the property--and by damages I don't just mean retaliation, I mean deferred maintainence, pet damages and crazy decorating choices which is what I mean in 3) above...losing control.

    Also, an owner held mortgage, even seasoned, is not very liquid and if interest rates go up, even less so.  So that too.

    But people owner finance all the time and there is something to be said about mailbox money...it's the perfect kind.

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  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    Jay, 

    my comments were meant to be tongue-in-cheek...sorry I missed the mark.  I agree with you 100% on the hometown banks although the are fewer in numbers than ever before. I'm a credit union devotee ever since they were allowed to handle business accounts (something the big banks fought tooth and nail) and they're member owned unlike banks.

    My remarks were really just to prove the point that interpretations are nothing more than that...one person's opinion. After all, our criminal and civil courts are full of very knowledgeable and extremely competent attorneys who simply differ on the meaning of a word or two in a contract or civil or criminal statute. 

    Investing can not be accomplished without risk. Some investors believe you will get sued or incarcerated if you leave your residence and others are very risk tolerant and will stay within the confines of the law, as they or their legal team interpret those confines to be, and move forward with building their businesses.

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