Funding Options for a Single Family Home

8 Replies

First of all, this site is a wealth of information and I'm really impressed with how helpful everyone is.

Now to the question: I've found a property and negotiated a deal. Paying $55k for a house valued at $75k. No work needs to be done on the house. The tenant in it wants to buy it through owner finance, so we're including that in the closing of the property. He's paying $10k down, financing $65k. I'm giving him the option of 120 months at 8.5% (payments $802/month) or 96 months at 7.5% (payments $902/month).

1) I'm pretty excited about this. It seems like a good deal to my newbie eyes. At closing, it'll pay out the $10k down payment and the payments will provide a good cash flow with a good overall profit. Am I missing anything?

2) This is the big question...what are the best funding options for this? I know a cash partner would be ideal and that's a possibility. I may use hard money, just to get the job done and buy time to set up better funding. (That will also get the down payment in my pocket, which will provide options.) However, I know that will cut into the profit. The only other funding source I'm familiar with is traditional, which seems less ideal. Any ideas on non-traditional funding options?

I'm in East Texas, btw. I greatly appreciate any insight that may be provided. Thank you!

Originally posted by @Leather Nix :

First of all, this site is a wealth of information and I'm really impressed with how helpful everyone is.

Now to the question: I've found a property and negotiated a deal. Paying $55k for a house valued at $75k. No work needs to be done on the house. The tenant in it wants to buy it through owner finance, so we're including that in the closing of the property. He's paying $10k down, financing $65k. I'm giving him the option of 120 months at 8.5% (payments $802/month) or 96 months at 7.5% (payments $902/month).

1) I'm pretty excited about this. It seems like a good deal to my newbie eyes. At closing, it'll pay out the $10k down payment and the payments will provide a good cash flow with a good overall profit. Am I missing anything?

2) This is the big question...what are the best funding options for this? I know a cash partner would be ideal and that's a possibility. I may use hard money, just to get the job done and buy time to set up better funding. (That will also get the down payment in my pocket, which will provide options.) However, I know that will cut into the profit. The only other funding source I'm familiar with is traditional, which seems less ideal. Any ideas on non-traditional funding options?

I'm in East Texas, btw. I greatly appreciate any insight that may be provided. Thank you!

Just a thought, have you tried Etpcu? Their home office is there. I have good luck with the regional office here in Nac. 

Talk with the seller to see if they would be willing to sell to you "subject to" where they deed the property to you and make payments to the seller each month. You should be able to get some cash flow between the rent the tenants are paying and your payment to the seller.  

Originally posted by @Mike Reynolds :
Originally posted by @Leather Nix:

First of all, this site is a wealth of information and I'm really impressed with how helpful everyone is.

Now to the question: I've found a property and negotiated a deal. Paying $55k for a house valued at $75k. No work needs to be done on the house. The tenant in it wants to buy it through owner finance, so we're including that in the closing of the property. He's paying $10k down, financing $65k. I'm giving him the option of 120 months at 8.5% (payments $802/month) or 96 months at 7.5% (payments $902/month).

1) I'm pretty excited about this. It seems like a good deal to my newbie eyes. At closing, it'll pay out the $10k down payment and the payments will provide a good cash flow with a good overall profit. Am I missing anything?

2) This is the big question...what are the best funding options for this? I know a cash partner would be ideal and that's a possibility. I may use hard money, just to get the job done and buy time to set up better funding. (That will also get the down payment in my pocket, which will provide options.) However, I know that will cut into the profit. The only other funding source I'm familiar with is traditional, which seems less ideal. Any ideas on non-traditional funding options?

I'm in East Texas, btw. I greatly appreciate any insight that may be provided. Thank you!

Just a thought, have you tried Etpcu? Their home office is there. I have good luck with the regional office here in Nac. 

 That's funny, ETPCU is my bank. I just didn't expect them to be interested. I'll definitely give them a call. Thank you.

Originally posted by @Dale Sorensen :

Talk with the seller to see if they would be willing to sell to you "subject to" where they deed the property to you and make payments to the seller each month. You should be able to get some cash flow between the rent the tenants are paying and your payment to the seller.  

 Great idea. Thank you! 

How is this deal going? Did you close? 

@Sean McDonald no, I actually decided against the property because of the location. There were also some details that seemed kind of sketchy, so I let it go. Planning on looking for a flip in January.
The more I researched Dodd-Frank, the less I was willing to do owner financing. Without the tenant buying the house, it boiled down to a house in a D neighborhood. Looking at worst case, if the tenant bailed, I think it would be too much of a headache to collect rent there. I had a bad feeling he may have just been trying to help get the house sold. I trusted my gut and bailed lol
Update: Funny story...the wholesaler contacted me again on a second property he was trying to lump with the first house, mentioned above. He wanted me to buy just the second property this time. I knew both properties went under contract with another investor, so I asked what happened. He said the first house came back with "over 20 title issues." So, yeah...trust your gut.

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