What would you do if this was you?

Question

Hello Everyone i need help or ideas/opinions

I have 4 rental properties under my belt, am lookinng to get into multi family properties/deals. So i saw a 6unit deal for $145,000 in a low income area, Which is mostly the where i invest in.

It is a for sale by owner so i called the owner and pitched him the idea if he would be willing to eliminate the bank ( mind you i have the option of the bank as well) And work with me directly.

The property needs some work about $10-20k to bring it to rent ready. he said he is open to hearing what time of financing options i can bring to the table and we can take it from there.

What financing strategy options would you do or suggest if this was you? Or would you just get a loan from the bank? Any idea is welcome

Thank you inadvance.

Brent Coombs · Answer

@Yaamu Camara, asking if "he would be willing to eliminate the bank" suggests (to him) that you aren't qualified to get a loan from a bank yourself - even though you're telling us that you are.  Did you have any pressing reason to want him to Seller-finance?

If a high deposit is a problem, your pitch needs to show that your monthly repayments to him would be at least what he is netting now (ie. ask for his income / expenditure records for prior years), and remind him that he would be free of Tenant maintenance requests / non-payment issues going forward. And, if you renege, he gets his property back.

The Interest Rate you're prepared to pay should be better than he can get from a Bank.

Note: If you can get Bank approval, you're in a better position to get a "cash" discount.

Seller-financed, you're unlikely to succeed in pushing for a lower selling price.  Good luck...

Todd Dexheimer · Answer

You should be able to find a bank to finance this. Call your local credit unions and smaller banks and talk with the commercial lenders. these will be your best options and should be able to get you a construction loan as well.

For seller financing, just make sure the terms beat the bank. I have done a lot of deals with 10% down to the seller at market interest rates and terms. When you present it to the seller, show them the amortization schedule, so they can see the money they will be making.

This may help provide some ideas: https://www.biggerpockets.com/...

Jeffrey Donis · Answer

As mentioned- seller financing sounds like something he is open to. You could negotiate a % for a down payment, a monthly payment to the seller (as long as it cashflows+makes sense for you), interest rate and loan term with the seller. I would watch some videos on how to structure something like this or possibly partner up with someone who understands how to do this if you are not sure.

Yaamu Camara · Answer

@Matthew Crivelli exactly finding a commercial lender was hard.. i’m in contact with one but i don’t know what the outcome would be. More reason i suggested seller financing to him.

I really appreciate your input thanks.

Yaamu Camara · Answer

@Nick B. Hard money is a great idea, i’ll

Look into it.. and yes i have to find a way to structure the seller financing if am going that way.. i was thinking maybe like a 20% down payment and monthly payments however to give me 3months grace period.

Thank you so much for your suggestions

Yaamu Camara · Answer

@Brent Coombs thank you for your respond/input. Yes he might think i do not qualify to get a loan.. i will have to think and pitch to him in a better way. Thank you so much for your suggestions.

Nick B. · Answer

You've already asked him about owner financing and he seemed to be open to that. Now give him a few options of how you want to structure that deal.You other options are traditional financing (20-25% down + rehab out of pocket), hard money (70-75% of ARV with rehab financed as well), and obviously cash.

Matthew Crivelli · Answer

Just a heads up. It might be hard to find a commercial lender that wants to lend on a six unit property with such a small valuation. Most cases you need to be at 250k +, also remember with anything over 4 units the commercial appraisal will cost a pretty penny and take a few months to get back. Now if its beat up and you could add some decent value. You might be able to get in with a bridge loan but you would still be looking at 25%-30% down because of the unit count.

What would you do if this was you?

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