Investor · Stratford, CT · Member since 2015 · 110 posts · 16 votes
Hi,
I found a house, I've called the owner (left a message) I need to know if they want to sell how to structure it.
Seller financing? and if say I buy the house from them for $50,000 and they hold the paper and I rehab it and want to sell it how does that work? I'm confused?
Or just buy and do a flip?
I may want to buy and hold.
This is my first attempt at a deal and I'm not sure what to do. Flip seems logical but if they hold the paper it would cost less for me, but not sure how to make it win win.
When you're trying to come up with Win/Win opportunities like that I'd focus on trying to discuss them holding, which means you won't be out any money upfront for buying the property. The renovation which will hopefully be a number you could go to the table with and discuss exit strategies such as selling a finished property that the market is looking for and splitting the profits (minus whatever holding and reno financing you incur).
Lesley Govan I would go to the seller with as many options as possible that I could pull off. I'm currently negotiating a deal myself. We contacted the seller and have a lunch schedule in a few weeks when they get back from traveling. I know they are willing to at least entertain the idea of selling because they agreed to meet. I know that they have no liens/ mortgages on the property. In the mean time I am preparing multiple options, so while I am learning their plans for the property and their goals in life, I can offer multiple options for them.
Option 1- They hold the mortgage for the entire property.
To protect them, there are all kinds of clauses that could be added like to get paid in full with 1 year notice, etc. (which could be risky for buyer)
Option 2- I give them 10%-20% down and they finance the rest. Again, I am willing to have my lawyer add clauses that I can live with to pretext the seller.
Option 3- They finance 25% and I find financing for the other 75% (which I'm currently working on by applying for a HELOC and other financing options)
Option 4- Lease option (I lease the property from them for one year with the option to buy for a set price in year. Which would give me time to secure financing)
Option 5- Buy for cash now, for lower price.
I am planning on having a folder, with information and visuals on each of these options. My preparation will include total profit for them (the interest they will earn from holding mortgage will be the most profitable) I am only going to use them if it feels natural, and if the seller seems interested or shares a need/ want that falls in line with what they want. If they want cash now, I might show them how much they could earn by holding the mortgage and save by not paying taxes, maintenance, capital expenditures, etc. I hope this helps. I've found that it's important to look for other "abandoned houses" as I'm focusing on the one at hand because it's a numbers game. Some people don't want to sell. Some owners want to much. It's my job to find the ones who are willing to sell at a price that makes sense for me. Let me know if I can help.