Your opinions would be appreciated! I think I'm gonna do it I just want some feedback!
SFH 4/1, 3 car garage fenced in yard, across the street from local college on busy road, I have 5 other rentals within 2 blocks. It's an old house but in good shape, seller is fixing everything now.
Rent: 1100, conservatively. probably more with garages
Seller financing terms
Term: 20 year amort, 10 year balloon
Cash flow 250-300/ month after everything. (3000 on 18750)
This is in the area I am trying to get a monopoly in! Needs no work it's ready to rent, pretty good seller financing terms I think. I am at 70k, seller wants 75k we are currently negotiating. Would you do this?
hi nick. i would do it for one good reason. the college across the street. why would you rent it out to a single family? rent each bedroom to a college student. do you have any idea how expensive those dorm room are? some are $600 a month. you could rent each bedroom for $400 a month and make a lot more than you could renting to a single family, and you would be saving some college kid $200 a month. thats a lot when you are paying your way thru college. keep in mind, conrad hilton of the hilton chain of hotels started out that way
I would give him a couple options on seller financing. If he wants $75k, the give him $75k but ask for a 0.5% reduction in the interest rate, or amortize it to 30 years. If you offer him $70k, then give him his full asking rate. Or offer full price with only 20% down. Quite a few ways you can package it. In my opinion I would give him 3 options, non of them giving him everything he is asking for together, the deal should work for both of you. Ask him what his priority is (down payment, rate, etc) and then make your options based off what he tells you.
seems very solid.. and a good building block for your monopoly play !
HI @Nicholas Spohn ,
Mark Elliot has a good point. Check out this post from @Mike Henkel .
@Mark Elliott thats generally what I do. Increased supply has brought down rents in the area, I get between 300-350 per room from students. Maybe $50-$100 extra for the garage. I've seen demand from students slow down lately.
@Drew Castleberry I thought about that and have crunched the numbers on different scenarios. I think I might stick to my guns here. Maybe meet him in the middle at $72500. I know what my friends and I have paid for rentals in the area, and while I think this is a decent deal its not a slam dunk. The visibility from the busy street and the school will be nice. I am closing on two duplexes this month, taking my units from 7 to 11 so I'm not desperate for a deal, and I'm already going to have my hands full.
@Jay Hinrichs Thanks Jay, If this goes and my other duplex closes I will have 6 houses (7 units) right across the street from the school. In one spot they own 3 in a row, I am the 4th. So they might have to buy me out to put up new dorms! I love playing monopoly.
@Grant Warrington Thanks Grant, thats a great story and thats pretty much what I'm doing. The only thing that bothers me about those articles is that I don't care how many units he has I want to know how much money he is making! Sounds like he's doing fine but if he is netting 40 k per year his time is probably better spent somewhere else. I know its not PC to put that kind of stuff in articles but thats really all that matters isn't it?
smart play I got in front of some college expansion in Jackson MS.. quite by accident I had to foreclose on the homes but then the college wanted the whole block and I was able to sell them off for cash...
Thanks guys! @Drew Castleberry I gave hime some options and he ended up going with the original price and interest rate, with a bigger downpayment. The downpayment is coming from my line of credit with the same interest rate anyway so that doesn't really make a difference to me. Thanks a lot for the idea! Wow my portfolio will go from 7 to 12 units in the next month!
Congrats on the deal! So you ened up paying the $75k @ 4.25% and had a down payment greater than 75%? What's the amortization and balloon payment? That's awesome that you're able to utilize your loan of credit and the extra down payment will generate more cash flow for you as well. If you don't mind me asking, what are you going to cash flow after you add in the debt payment for your line of credit?
No. Sorry, my original offer was 70 k @ 4.5 %.
So with 65% financed by the seller and 35% from my HELOC, all at 4.5% my monthly payment will be $443.
Rent : $1200
So, not amazing cashflow but when you consider no $ down its not so bad!