Rental Property Investor · Mountain Grove, MO · Member since 2018 · 35 posts · 8 votes
Hello, I am currently interested in buying 3 duplexes. All are currently rented and bring in 4500 per month gross. Property taxes per seller are 8,000 per year. The owner wants to do seller financing with these terms
Asking price: 600,000 but says he is not totally firm.
Down payment: 150-175,000
Interest rate: 5-7%
Payment: unsure yet but wants a balloon in 5-10 years.
So I'm posting looking for advice as I am going to meet with him next week and discuss further in depth about buying the property. I have over 60,000 in savings so also interested in ways of obtaining money for the down payment. Thank you
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
7y
@Jacob George Lada
Negotiating seller financing is all about knowing what you want and the seller wants and making them think they are getting what they want. For me the most important thing for me is cash on cash return so I focus with as little money down as possible. If the seller is focused on a certain price I give them that price but ask for better terms. If they want a high down payment then I point out a bank will finance repairs so a land contract may not be as beneficial to me as I think and again ask for better terms. This is a general message mainly because you have given general information but build rapport with the seller as much as possible
and make sure they are confident of your execution to pay. We are working on a 2.1 million apartment purchase where seller has already agreed to drop down payment from 20 to 10 percent because they are confident we can run the property better than they ran it. They would not have done this if they perceived our ability to manage as an added risk. Hope the negotiations go well, feel free to reach out with questions. Remember choice of words and presentation matters.
Berks County Blandon Pa · Member since 2018 · 24 posts · 5 votes
7y
You have a lot of questions that still need to be answered.
Are the month to month?
Do you plan to raise them to market rate right away?
I know I have a couple properties that are free and clear, tenants have been there a long time and I don't raise rents as much as I should. I plan to transfer my properties to management company. It will make it more business like.
Rental Property Investor · Mountain Grove, MO · Member since 2018 · 35 posts · 8 votes
7y
@Jon Simpson
@Craig Jeppesen
I spoke with the owner today. He states only 1 tenant is on a lease until July 2019. The other 5 tenants have surpassed their 1 year lease. If the tenants chose to leave they must give a 30 day notice prior to leaving.
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Jacob George Lada I would do conventional financing for best terms. You can purchase your 1st MF as owner occupied with 3.5% or 5% down, pending on how is this property from where you live if you are W2 paid and keep the funds for the 2nd one as INV as you will need 25% down and go from there
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Jacob George Lada You can still do an owner occupied even if there are tenants, sellers agent just needs to provide a month to month lease since you need to show a units would be vacant within 60 days after closing. Not sure you can qualify as owner occupied based on your current home situation or what is the commute from work if you are W2
Rental Property Investor · Mountain Grove, MO · Member since 2018 · 35 posts · 8 votes
7y
@Diana Muresan I am a travel nurse. My home base is in Missouri but I'm currently staying in Michigan about 15 minutes from where this property is. I plan on living here in Michigan long term if i turn permanent staff at the hospital I'm currently traveling at. So say I done a conventional loan on all 3, paid 20% down, would I see the same interest rate across all 3 notes or various? Or how would I work the FHA when all units would be occupied
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Jacob George Lada only one can be OO (owner occupied) with 3.5% or 5% down pending on the program, the rest are investment, which is 25% down, you might be able just to get 2 buildings for now
Rental Property Investor · Mountain Grove, MO · Member since 2018 · 35 posts · 8 votes
7y
@Diana Muresan so are you saying I could do FHA, without living in the actual property?? All units would be occupied and the tenants plan on staying if I purchased.
Traverse City, MI · Member since 2018 · 37 posts · 16 votes
7y
Sorry to just get back to you! I did read through the entire thread. This would be my first apprehension... well first I guess would be having to inherit tenants (lol)! I have had no luck with that and swear I will never do it again. So my second worry...this will cost well over 100K of you cash flow just to purchase, probably more like 130K. We are in a very good market right now. To sell them individually if need be may not be as easy as you think. We have a ton of income based housing being built. I know the condo/apt building that was was finished not too long ago on Garfield and 8th are renting for about $1100/month. I feel like the property is overpriced, so equity to purchase another property may not be there for awhile. I'm not sure what your long term plan is, but for the BRRR method (thats what I do mainly) I don't like the the way the numbers look!