How should I go about financing this deal?

15 Replies

Hello BP family.

I need a little bit of insight from you all. I have a motivated seller looking to sell me her home but she has a mortgage on it, but she real wants to get rid of this property. I haven't even told her for sure I could buy it and I found out she has already told her tenant(a tenant who hasn't paid her rent for the past 4 months) to start looking for a new place to live. I just wondering if should or even can set up either owner financing, lease option, or try to eve assume the loan (her month payments are pretty low). Or if there are another way I can go about this all?!? Any and All help would be greatly appreciated. 

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@Account Closed how would I go about setting that up tho? This would be my first time trying to get owner financing. Sorry if my ignorance is showing. 

What is it that you are trying to accomplish? Are you looking for cash from a wholesale deal or cash flow from something like a owner finance deal where you can clean it up and rent it back out.  Its several ways you can go but you have to start with the end on mind

@Kevin Fontleroy I am a buy and hold investor so I am trying to get it to cash flow and rent it back out. 

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For the owner financing talk to a title company or real estate lawyer to help you draw it up and getbit properly recorded. I wouldnt immediately offer the owner 20% down without knowing her goals. Now if she needs a lot of cash now, sure offer the 20%, she needs it an ultimately we are here to help. But she may prefer payments over the next few years to supplement income. Find out her needs and go from there

@Kevin Fontleroy I have talked to her and she would like to have payments but she just wants to no longer be a landlord which is why I figured owner financing would be a great option. But your saying I would need to talk to a real estate attorney about doing owner financing? I just trying to see what a owner financing deal will look like so I can figure out how to example this to her so she can she the benefits of it all.  

so if she doesn't need a lot of cash don't offer it. Determine the price you will pay and establish an interest rate with her. Tell her you will pay X amount for Y number of months. It doesn't have to be anything to difficult.

I was saying talk to an attorney or title company because I don't know who handles those transactions in your state but you definitely want it recorded properly for your protection

@Kevin Fontleroy Would it be ok If I sent you a pm and show you the numbers I have figured out to see what you think?

@Justin Dixon you'll have to take title subject to the existing mortgage. There could be a due on sale clause so the seller will need to know what could happen if called by the bank. In the past I ran the numbers through the BP rent calculator and figured out what I could safely pay, then set up the offer with her mtg payment in mind. So if she pays 500/month in piti and it rents for 1000 then I may offer her 100 a month maybe? So 600 total no accounting for other expenses. Depends on the numbers for this specific deal. Just make sure as others have said to get title in your name/company name and make sure you are making payments to the bank not her.

@Uriah D. I ran the numbers throught BP rental calculator as well and I know her asking price and balance on her loan as well as her currently monthly payments. Would it be ok if I pm you because I feel like you could better answer my questions if you could see the numbers. And I know BP wont let you post the numbers to so investments I guess. 

@Justin Dixon I'm pretty sure you can post the numbers? At least I thought you could. Since you already pm me that works too. Make it happen!

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@Justin Dixon , (thought bubble): I'm often curious why so many people look to buy homes, when they're in no better borrowing shape than the current owners - but are still surprised it's so hard?...

@Brent Coombs (thought bubble): I am often curious why so many people think there's only one way to do something, like have they not listen to any of the podcast on BP or read any of the articles? Most of all the investors up here started with little to no money and still made it work instead of spreading negativity. Not surprised the people who are serious about giving good advice and are serious about there real estate investing careers would at least give back to a great site like BP by being a paid member. 

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