3/1 Flip to a 3/2 with Owner Finance

2 Replies

Hello,

Looking to do my first owner financed flip with terms and want some advice from someone who has done it before.  This is a 3/1 that we are turning into a 3/2.

3 options to purchase:

1.  All cash at $30K

2. $35K purchase price, $7K at closing, $2500/year at 3 years, $20.5K payoff

3. $40K purchase price, $3500K at closing, $3200/year at 5 years, $20.5K payoff

ARV is a conservative $120K, High Rehab budget of $55K . I typically factor 10% for holding and selling costs. So $12K

$120K - $55K - $12K = $53K for acquisition and profit

The main question is it worth using the terms at a reduced profit on the actual flip?  Anything I am not calculating on the positive or negative side?  What if I keep this for a rental, does that change anything?

Thanks for the help!

If the owner financed part has the words Land Contract or Contract for Deed, buy with all cash only.    With Land Contracts you own nothing.  

I would probably do option 2 if I were trying to obtain terms. I'd make sure I owned it though. An up of $5k in price for a reduction of $3500 in down payment (#3) is too costly.  Good luck @Micah Redden !

Thank you for your insight @Steve Vaughan !  I am going to tweak this and present it to the seller.  Buying on terms is certainly new for me.

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