Hello from the Finger Lakes of New York state!
Residential Real Estate Broker · Ithaca, NY · Member since 2012 · 10 posts · 0 votes
Hello from the Finger Lakes of New York state!
6 Replies
Hi Elizabeth! I'm from Ithaca (long since removed). We used to refer to Slaterville as "the sticks"! What are the numbers as far as rents, taxes, etc. Does the LL pay utilities or is it separately metered? I've bought many properties with owner financing over the years. Why do they want to sell? Do they need the cash or are they looking for a stress-free stream of income. Perhaps they are leaving the area? Since they are not paying a commission, they can finance the whole thing without having to bring money to the table. I'd ask for as long a term as possible and as low a rate as you can get. It's up to you to determine the value. This can be done by looking at comps (if any exist) or looking at rents vs expenses. It seems that they have taken care of a number of expensive items. Is there any delayed maintenance? Roof, etc. Expensive items that may come up soon? Give us the numbers.
- Residential Real Estate Broker · Ithaca, NY · Member since 2012 · 10 posts · 0 votes13y
Slaterville is still in the "sticks"! Great hearing from you, thanks Cheryl.
Utilities are separately metered, with new gas meters outside the house. They haven't said what the other unit pays in rent, and I will find out this evening. I believe it's a section 8 unit. I pay $500/month, which includes water only (it's from a well. There is a septic tank too.). They said they would bring tax information as well. They didn't approach me with regards to selling, I approached them and they said they would be happy to consider it. I would imagine that a stress-free stream of income would be of interest to them, as they are retired and spend the winters out of state. I plan on looking at comps today. Yes, there is delayed maintenance with the roof, a new exterior paint job and I can only imagine what the other unit will need after move out. There is also a torn down shed in the back that will need removal. Insulation, etc. NOthing that I can see that I would have to do sooner than later, I don't think. Oh yeah, there are also animals (prob. rodents), in the walls and ceilings during the winter, too. Is there anything else you would suggest as far as getting them to owner finance the whole package? I am not in the position to finance a big down payment atthis time.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes13y
There are many problems you will have to fix that I guarantee you cannot see right now.
If you do not have a down payment or any reserves I don't think you want to put yourself into that situation. Even if they finance with nothing down you still have closing costs, inspections, etc. which could be a few k.
Why don't you get licensed and do some PM work for them?? This way over time you learn the ins and outs of the property (good and bad). Then you can decide if you still want that property or not.
Well, you definitely need to know the lease terms for the other unit and view it (ask tenants if everything is working, etc.). I'd get estimates for a new roof and exterior painting (also fix-up of other unit, if need be). How old is the septic system? I got burned on one a few years ago and it cost me over 3K to put in a new tank (mine was ancient and had collapsed on itself). That was not an item I could put-off. Do the units have circuit breakers? Use your estimates as negotoiating tools.
If things are still the same in Upstate NY, you won't be looking at much appreciation. How is rental demand in the "sticks"? If fair market rent is $500 per side, then you are looking at 1K income per month less piti, reserves, etc.
I'd start at what you think is the right price and then deduct the deferred maintenance items (roof, painting, etc.). Once you agree on a price (as low as you can) then you negotiate the financing. There are alot of great things about owner financing. In fact, you would have no chance of buying this place without it. If you have paid on time for 4yrs, they should feel pretty good about you as a credit risk. I assume your credit report is good? Owner financing will save you a lot of closing costs (bank fee's, etc). Do get owner's title insurance and, probably, a good inspection. Older people are sometimes reluctant to carrying the financing for more than a few years. I'd ask for 30yrs at 4% and take it from there. They may want a balloon earlier (3, 7, 10yrs). You need to educate them on the benefits to them of a long-term, safe, stream of income to get the longest term possible. In they insist on a balloon, still have it amortize over 30yrs to keep your payment down and build up reserves. I wouldn't agree to a balloon of less than 7 yrs - preferrably 10. Do you at least have an emergency fund or line of credit available in case something goes bad (eviction, major repair, etc.).
- Residential Real Estate Broker · Ithaca, NY · Member since 2012 · 10 posts · 0 votes13y
I totally hear you, Joel. Thank you. Lots to think about, that's for sure. But I think, if I don't start now, with a house that isn't perfect and could use some work, when will I? Food for thought.
- Residential Real Estate Broker · Ithaca, NY · Member since 2012 · 10 posts · 0 votes13y
Cheryl - I am feeling a little nervous about stating a purchase price without any comps. Can't find them anywhere. Called an appraiser and she wants to charge $600. Would an appraisal be advisable at this point, or just go with what I think would be fair. For example, the assessed price has not changed since last year and stands at 105K. Owner threw out 120K. 15K difference. As far as appreciation goes, this would be a buy and hold. Apparently the unit next door (3/4 of the house), brings in good rent. I will investigate this further this evening. I guess I will let them know that I don't have a good feel for an offer price yet. I will, however, throw out your idea for terms...
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