To Seller Finance or Not? How to calculate return?
Hello All!
Long time lurker but not new to the RE game. I'm in the military and have a couple of rentals that I want to eventually get out and move into the Multifamily/Notes side of the house. I feel the market is overvalued right now but with ARMs about to reset to a higher rate I feel that there will be opportunities within the next few years.
With that, I want to become passive role as I am tired of dealing with rentals. I have to say while it is great to have tenants I feel that need some guidance or advice on the next step. The properties I have are below.
1. FL - 3/2-Single Family - Owe 200K, FMV- 245K- Rents for $1580- Same tenant since 2013. Tons of repair costs due to hurricanes and A/C failing. Tenant wants to purchase it and I could work a deal as I want to capture my equity, and save hassle of putting it on the market. Have the possibility of paying off the bank and seller financing it. Not sure best way forward.
2. VA - 3/2-Singe Family - Owe 170K, FMV-190K- Rents for $1300 - Minimal repairs, tenants are long term as they are military. Minimal issues here. Probably keep
3. GA - 3/2- Single Family - Owe 88K, FMV - 135K - Not renting - Would need 20K in repairs to sell. Should I sell as is, repair and rent (don't want to), or repair and seller finance?
The reason I want to shift to Multi or Note is that I have considerable capital that I would like to move from SF and into a more passive role as honestly don't want to deal with tenants. I understand that with notes and servicing multi is that there are other considerations but a lot less headaches.
Any advice from those that shifted from SF, to multi or notes?