Owner Finance Opprtunity at 0% (But is it worth it?)

9 Replies

I have a question, yet may not have enough information. My wife's grandmother has property (here in California, in the desert) that she owns free, not exactly clear (tax issues).

She is willing to sell the property in an owner finance deal (she really doesn't know how it works, yet I know once I walk her through everything and how we'd agree, she would be open to it). She has the money to pay her taxes, she just wants to get from under the property, yet there's nothing out there, and I wonder if I should be bothered with it.

What should I do to ensure I've done all DD?? Have the land/property appraised? Is there any value to be gleaned from such a situation to be used as leverage for other RE endeavors?? Structure the sale to below what the appraised mark is soas to have instant leverage??

Any/all advice is welcome. Thanks.

Collateralizing land is a tough sell to a potential lender. Appraisals are hit and miss. What's the zoning? Are there any utilities within site? What's it gonna cost to dig a well? What's it gonna cost to run electricity to a pole? Is there a Mobile gas station going in across the street? A freeway? If there is nothing out there where this land is, other than staring at a deed in your parlor with a glass of cognac while wearing a smoking jacket and listening to Dizzy Gillespie, why?

I get it if there is a piece of land the size of a football field that has a view of the Bay Bridge or Alzatraz, that you can get for a steal with owner financing but short of that, do you really want to own a piece of dessert a half a state away that's never going to be developed?

@Ron S. Thanks for your response. It actually has a well, needs some repair, but has been used as recent as 6-8 mos ago when a relative lived on the property (it's a house 3br/3ba, detached garage is said to be zoned for commercial use, as well). It's 11 acres, and livable, I am just unfamiliar with such property types and feel if I had a better understanding of how this leverage can be used (if any can be gleaned from it) regarding the property. It's just in such a remote location. Other homes are there, and those have sold between 150-200k ..

She would sell this to me for about 90k .. yet I am not trying to get stuck if it appraised lower (which is unexpected, but can happen).

Originally posted by @Andre' Arceneaux :

@Ron S. Thanks for your response. It actually has a well, needs some repair, but has been used as recent as 6-8 mos ago when a relative lived on the property (it's a house 3br/3ba, detached garage is said to be zoned for commercial use, as well). It's 11 acres, and livable, I am just unfamiliar with such property types and feel if I had a better understanding of how this leverage can be used (if any can be gleaned from it) regarding the property. It's just in such a remote location. Other homes are there, and those have sold between 150-200k ..

She would sell this to me for about 90k .. yet I am not trying to get stuck if it appraised lower (which is unexpected, but can happen).

 Where is the property located? I'm not asking you to divulge an address but in general, where? I foreclose on property in rural areas all the time and I'm amazed at times that I actually can find a buyer for them. If there is a roof on it, chances are, someone will want it. That said, that person that would want it in the middle of nowhere, may or may not be a good tenant!

 If she owns it free and clear outside of the taxes, why not just cure the tax default and offer to take it off her hands?

@Ron S. It's in Newberry Springs, CA .. and yes .. It's a fully functional home .. just needs updates .. which I can't do at the immediate moment, but can in the near future ..

I can admit, my ignorance (at the moment) of anyone wanting to live in such an extremely rural area is cutting off foresight as to seeing what it could be as a (potential) income generator.

That is one remote, desolate (not sure I'm stretching here) place.

My two cents, acquire and sell it, even if you have to carry back the note.

Being an absentee landlord is no fun. You are 8 hours away (If you are in the Bay area) on a good day. If you put ten grand into rehabbing it (Conservative?), how long will it take for you to recoup that? Your tenant pool is limited. Who's gonna rent in that area? A certain type for sure. they are either someone that doesn't want to be found or, maybe, they just want to be away from the hustle and bustle but as a landlord, you'll be called at two in the morning for the stopped up toilet. Can you find a property management company out there? Probably but there goes 15% off the top just to start.

If none of that deters you...congrats on your new property you're adding to your portfolio.

I live on the corner of two dirt roads, actually on a T. Why do I live there? Piece and quiet after a busy day. What is the land worth out here? Not much, what are the houses around me selling for?  Well you see there are these people from Chicago who have found out that within 6 miles of my home there are six lakes, that land is 2k an acre and they have found out that they can get a property out here and have a modular home or a tiny house put on it and then they have a second home out of the city.  What are they willing to pay????? I would make you laugh but the one that sold most recently on the paved road sold for 200 K and the one on the dirt road sold for 250K. They were both one acre.  What did I buy mine for? 5 acres about 25 years ago 8,500. A modular home then 7k the well and the electric 6 k.  To do this now 100K but selling for 250 K .  My point to all this is doesn't matter what you think it is worth it matters what the buyer think its worth.

Have a real estate agent look into what it is worth in the area it is in.  Get it on a seller financed deal with whomever you can or have them call me and I will buy it on seller financing from her if the quote comes in good.  

I think you are looking a gift horse in the mouth....

Call me if you need help......

@Michele Wax Thanks I appreciate it. I definitely understand my ignorance on such living, and being presented it, my mother in law (who is steering the car) will make it happen, if I want it. I am just trying to get past my own vices, yet I do see what you mean, people do value peace and quiet, even if they have to get away.

I forgot, it also has a man made lake, a small one, yet one nonetheless .. this property was built on this plot in 1989 ... I'll take your sound advice and make good on it - I get it - I don't believe things like this pop out of thin air on accident.

Thanks again.

Just make sure you know what it is worth and what it can sell for in that area.  If its worth 100 K then offer her 80K  .   Or you could do a wholesale sale on it.  Buy it  from her and sell immediately to someone else. The way that works is you buy for 80 k and sell for 100 k and you get 20 and she gets the 80 k it is a good way to make some extra cash and be out of the situation.