First post! I have 5 SFH rentals in Long Island, New York. They produce great income because they are mortgage free.
As I approach retirement age I’m debating on whether or not it is worth selling one or all of these properties and holding the mortgage on them as well.
Purchased the homes for approximately $25,000, 20 years ago. I can sell them now for approximately 200,000.
I am considering selling one and holding the mortgage. $30,000 down payment, 6% for 30 years at $200,000 sale price.
The rentals earn approximately $12,000 profit each per year.
Am I crazy for considering this?
There is a large influx of Spanish immigrants moving into the neighborhood, so I can feel I can charge A higher interest rate for someone with poor or no credit.
The $30,000 down payment Will be utilized in case they default on loan.
@Donald Butler Why not sell them off one at a time? If one is bringing in $12K per year, but you could sell it for $200K; I'd go for the cash now. As for you selling it and providing financing for a buyer, it would give you income for a longer period of time, but would it give you any more than you'd get through renting it and what if the house falls into disrepair?
@Donald Butler - I'm a Broker on LI. What areas of LI are these properties located? How small/large are these homes? $1,000 profit per house rental seems to be on the smaller side considering they're mortgage-free. Even a $200,000 valuation seems low.
With FHA mortgage programs available for buyers with low-poor credit and a lower down payment requirement with lower interest rates, you may find it hard to assume somebody would take on your seller-financing opportunity.
Assuming your suggested proposition; PP $200,000, DP $30,000 Loan Amount: $170,000 - you're only looking to profit about $10,000/year on interest, with that amount decreasing each year (as the principal payment increases each month).
I'd love to discuss this further. If you have any questions, feel free to DM me.