I’m looking at another property that has 1 acre, 4 mobile homes on it with a gross rental income of $36,000. Asking price is $200,000k. The last deal I got was for $150,000 owner financed for a 5 year balloon with 15am. Put $30,000 down. I was able to refi it and pay the owner off as well as personal loans I used to fix the property up, however because of the type of property, was not able to pull my $30k back out even though it’s now flowing about $60k a year.
Wondering If I was able to convince the owner to do owner finance, what terms have you used to make it a little more convincing to them if I only have about $5-10k to put down?
@Pete Schmidt , if I was the seller, there's no deal I'd make like that - unless I was asking for higher than market value, and/or higher than my best net current cash flow repayments!
So if the seller is like me, a better question for you to ask is: why do I want it after all?
I reckon the lesson to be learned from your last one isn't: don't put so much deposit down, but rather: do your sums better in the first place! [ie. You paid at least $30k too much]. My 2c...
I guess if that’s how you think. But I hear what normal returns are here for low end purchases and my last one I did cost me $130k of my own money total, between down payment and rehab cost and I financed $120k through him and currently cashflowing me in $4750 a month now which jumps to $5900 a month next month when my last Reno is complete. So yes it tied up a bunch of cash but at the rate it’s cash flowing I don’t see many deals in this market around doing the same. This is a long term hold. Just not many banks wanted to lend to this property be cause it’s a brick house on the same plat of land as the 6 mobile homes. Just refi it but trying to get a Comp for this property is impossible and they did if I wanted to get an appraisal as opposed to their desktop one I could, and that would probably run $4000+. The reason this place was so cheap was because it so run down and owner only had 3 places rented due to his age and health issues. I have completely remodeled 6 of the unit’s finishing up on the 7th and have kept them all rented since. Though it suck that I tied up a total of $130k in it, what it’s making me, I don’t need see it as I over paid.
I am just looking for what ways people successful with O/F or what offers they went to them with. Both the last property and this one were on the market for a year+ and standard financing usually would not work and that's why they usually finance it through them. I guess most people that will do the work their self, didn't have the money to purchase. The people who had the money, didn't want to do the work and knew how much it would cost to do it all of they could even find someone decent around here.
@Pete Schmidt , when I suggested that "you paid at least $30k too much", that was in reference to BPs "BRRRR strategy", which expects you to be able to get all your deposit back when you refinance, which can only happen if and when you bought well below Lenders' later appraisal.
When you end up not getting any of your deposit back, you're very likely to end up in the very situation you now find yourself in: finding good opportunities, but with hardly any funds to go again, unless you can get to do some creative stuff like you're asking about.
I guess all I'm left to say is: good luck with that. Cheers...
Brent I got ya, and yes I understand that (but without putting that down the deal would not have gone through) It is what it is, and in 6-8 months I will make that back in the rents, just between now and then it puts a damper on other deals, which is why Im looking for other peoples deals they have worked. When I got involved in this I though a loan would be based more on what the property was producing and as you see its been a great return. The other thing that hurt was the amount of money put into repairs and that I have not gotten a full year tax return show this yet (just have a 1/2 year from 2016 with only 4 places rented). If it was not such an odd set up (house on same plot as mobile homes), and if I was able to show the income for a full year the bank said they would be able to lend easier. Either way its refied at 5.75 for 15 through them and the cash will come back slowly.
Now back to my original question of what offers have people made when approaching owners when trying to get them to owner finance? I don't want to over pay, but also need something to make it worth their while and feel comfortable with.