Two homes, Owner Finance but is it really a deal?

3 Replies

Seeking advice on a possible Owner Finance deal from another investor. Both of these homes are on Zillow with a bit of information and from what I can see there are pros and cons with the deal. Pro: 8k as a down payment is attractive and having a deal outside of the credit system is also attractive. Also, if the deal is cash flow positive right off that is a plus. Cons: Total cost of the two homes is likely more than the actual value. I also do not know what the cost of repairs are on the second home. I do not know the quality of the tenants. The area is a mill hill on the "bad" side of town. There will be zero to little appreciation in these properties. Below is the information from the seller and I would love some input from all sides. Thanks

2 Homes for sale with owner financing available.
$100,000 owner financed
8% down - $8,000
Payment - $875 a month includes taxes and insurance
Net Monthly Income $475
Net Annual Income $5700
Cap Rate 5.7%
Cash on Cash Return 71.25%

410 Hudgens St. Anderson, SC
3 bed 1 bath, recently renovated, rent $800 a month.
Taxes $1,395
Lease is up Feb. 2019

703 Posey St. Anderson, SC
3 bed 2 bath, needs a little work but is rented currently for $550 a month.
Rent should be $700
Taxes $579
Lease is month to month, tenant has paid on time for 3 years.

Hey Daniel, I am from Anderson. Are you familiar with these areas?

Normally rents at $1500/month on a 100K property would produce positive cash flow. Your numbers however based on expenses and debt repayment do not show any positive cash flow. You do not want to invest in negative cash flow.

Your return  would likely be much better and produce positive cash flow with conventional financing. 

Yes, I am also from Anderson.

Originally posted by @Heath Dunn :

Hey Daniel, I am from Anderson. Are you familiar with these areas?

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