Investor · Johns Creek, GA · Member since 2014 · 299 posts · 110 votes
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?
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
11y
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!