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!

Micah Redden, Real Estate Agent in GA (#263305)

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.

Micah Redden, Real Estate Agent in GA (#263305)