How to Structure an owner financed deal?

6 Replies

Have an opportunity to buy a property which ARV is between $85K and 90K. Seller has a HELOC of $65K with payments of $645 a month. The house needs approximately $20K worth of renovations and I believe I can rent it for a minimum of $1000 a month with some minor repairs/upgrades.

Here are my thoughts:

Offer $65,000 with a down payment of $5000 and a monthly payment of $400. 

What does everyone think?

Originally posted by @Will Jimenez :

He has a variable interest rate and it recently increased the $400 which has caused the hardship. I think he will take it.

 No he won't.  Why would he?  It doesn't solve his problem.  In fact, it makes it worse.

There are only two ways to solve his problem:

1 - Cash to him equal to the payoff of the HELOC, or...
2 - Payments to him equal to the HELOC payments

I’d agree with Joe . Your solution is no solution at all . The guy has still gotta come up with 245$ Negative every month and he can’t live there . I’d offer 5k down and 645$ a month and set it up in a trust with a third party paying out tax insurance expenses . Even though your payment will be higher you can do this for a shorter period of time than the 400$ payments but of coarse you may not cash flow any at that point which really sucks .personally  I don’t think this is even a good deal to be wasting time and money on given the risk involved .

Originally posted by @Will Jimenez :

Thanks guys. Was trying to come up with a creative solution but I don't think I can justify the $645. 

I don’t think you can either .unfortunatly  After that payment and a few additional ancillary expenses you’d be in the negative for cash flow at 1000 a month in rent . The numbers must work and the deal needs to stand on its own two legs ! Don’t give up hope, keep looking bro