Fix and Flip - 2 Properties - Utilizing Seller Financing
We are Tony and Kim. We just joined BP and this is our first post! We listened to many of the BP books for years prior to getting into the business of real estate. Kim is a Nurse and I just started working full time managing our business. Kim is working on her RE license and plans to join me in the coming months.
We currently flip houses utilizing our own cash/private loans to purchase, hold, and remodel the properties before reselling them. We have a great GC/Project Mgr & Subs/Handymen to take our projects from start to finish. We aim for an ROI of 25%+ and RoR of 120%+ on the deals we invest in. We recently came across a set of properties that blew these KPIs out of the water and don't want to pass them up. I've been learning about creative financing lately and gathered that the seller is open to owner financing. But, before moving forward, we need some guidance on how to structure the deal.
The purchase would be for 2 properties. House #1 was recently remodeled and is in move in ready condition. We plan to spend about $6/SqFt on a couple final finishing touches to capture as much value as possible and expect to list it for sale within a week of closing. House #2 needs about $20/SqFt of remodeling and we expect to complete/list it within 4-6 weeks.
We've proposed to the seller: full asking price, 15% down, remaining 85% balloon 4 months from date of closing. We don't mind whether the ballon payment comes from the sale of one or both of these properties or from one of our active flips we currently have going on.
My questions are:
How does the contract, or contracts, need to be written to give us the ability to list/sell these houses after we fix them up within the 4 month time frame. The sooner the better.
Would it be best to do 2 separate contracts, one for each house?
What are the logistics of selling a house that you obtained seller financing and still need to make a final balloon payment on?
Any advice would be much appreciated!
- Tony & Kim