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Updated over 11 years ago on . Most recent reply

Account Closed
  • Real Estate Investor
  • Novi, MI
132
Votes |
437
Posts

What do you think about this letter?

Account Closed
  • Real Estate Investor
  • Novi, MI
Posted

Hey BP,

I have decided that I'm going to send a couple of letters out to small multifamily owners in a local city to see if I get any leads. What I would ultimately be looking for is an owner finance deal so I wouldn't even have to go to a bank since I'm still a student and don't technically qualify for a traditional bank loan yet. Anyway here is what I have so far.

Hello Mr. Smith

My name is Nick Keesee and I am a real estate investor looking to purchase multifamily properties in Monroe. I noticed you own a property at 123 Monroe St and it peaked my interest.

Have you ever considered selling the property? Have your tax benefits run out or are you tired of dealing with tenants? If so I might be interested in purchasing your property and saving you money by not having to pay a high realtor commission.

If you are interested feel free to contact me at 123-456-7890 or email me at [email protected]

Thanks for your time and I look forward to hearing from you!
-Nick

What is your honest feedback on this? Good bad or ugly...it doesn't matter to me. I would like to hear :) I know the letter doesn't really insinuate that I would like an owner finance deal but I don't know how I could possibly say that right off the bat and still have people call me. That seems like more of a negotiation that would have to take place after I talk to them.

Any insight would be helpful!

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Joel Owens
  • Real Estate Broker
  • Canton, GA
11,270
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Joel Owens
  • Real Estate Broker
  • Canton, GA
ModeratorReplied

The letter isn't too bad. I don't think the part about commission is really important or needed.

The problem with the owner finance deals Nick is that inexperience creates a ton of risk for the seller. I have done owner finance deals and also have seen others do owner finance for a buyer.

Typical problems is an inexperienced investor has no money so instead of making repairs on a fully performing property they suck out the cash. The occupancy starts falling and the building starts going down. The seller who financed everything now has to take it back over and bring it back up to performing again.

I just talked with a seller like that the other day. He took it back and it took form August of last year until now to get it at 95% like it was before for years. The buyer was not taking the rent and putting it back into the property to maintain it correctly. Owner finance deals are really more risky in states where it takes a long time to foreclose. In those places some owners like to use CFD (contract for deed) type arrangements.

You might land a smaller duplex to quad from an owner than no longer wants to manage. They are usually dumping an overpriced dog on you that needs a ton of repairs. You will find you do not make much money but you get your start and a little cash flow and a ton of experience going forward. You can do a wrap around an existing mortgage. Wraps are going to become less common in a few years as banks look for loan that are owner financed around their notes so the banks can call the loan due and relend at higher rates.

Even if you find a seller to owner finance 100% of the deal you will need money for inspections and closing costs etc. ( a few thousand usually) for a small 2-4 unit and hopefully reserves to get you started.

The larger apartment buildings the investors are usually very seasoned and unless you have a decent down payment they will not want to take a risk on you. The letter I would make it shorter and to the point and then talk about the other stuff over the phone. Being new I think you will have more sellers take a chance on you with the 2-4 unit buildings than the larger ones.

Hope it helps some.

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