Loaning on Off-Grid?

Question

I have an Off-Grid property that is currently for sale. It is also unpermitted, so I figured on selling it for cash only....but of course the first showing is asking if I will carry paper. Due to various reasons I would prefer not to, so I'm wondering if there is any financing available for these types of properties?

TIA....

Bill B. · Answer

Depending on the various reasons for not wanting to finance it you could figure out your net ahead of time. My only seller finance sale was 25% down, no inspection, no appraisal. 7% interest (18 months ago, about 1% over traditional, so maybe 7.5-8% today.) and a 5 year balloon.

If you need the money or want to be done with the deal you could sk note buyers ahead of time. What percent of the notes value they would pay, that’s your net. If you can live with that you’re only the note owner for a month or two, the time it might take to find another buyer and close. If they don’t meet those terms tell them you’re not intereted, if you have other options. Good luck. Let us know what happens.

Don Konipol · Answer

Yes, there’s financing available for almost any property or situation - but it’s the cost that’s the killer. You may be looking at 15 -18% interest. Any buyer paying super high interest like this will want a HUGE discount from fair market value. You can of course owner finance with a note at say 10% interest, and then sell the note at a discount to yield 15 -18% to the investor, but you end up in about the same place.

A sophisticated strategy I’ve used in the past, taught to me by the late, great note expert Jimmy Napier (Invest in Debt) was a “workaround” that Is rife with risk and should only be utilized by very experienced real estate specialists, if at all. Essentially you purchase a property for fair market value with owner financing at say 6-7%, with the note having a “substitution” of collateral clause for a property of equal or greater value. as well as being “assumable”, i.e. no “due on sale” clause. You then “substitute” the property your selling for the property you bought, and sell the property you bought for the same amount you paid. The subject property you’re trying to sell now has an assumable 6- 7% interest rate note attached.

Loaning on Off-Grid?

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