All Forum Posts by: Aisha E.

Owner Finance Deal 2 SFR on 1 lot zoned MFR Selling Price: $215k Down payment on signing of contract: $35k Additional Down payment paid in 3- 6 monthly installments by November 2017: $15k Balance of Owner Financed note: $165k Terms: @5% payable in 2 years amortized over 15 years: $1304.80 (P&I), or $1729 (PITI) SELLER: 70 year old Realtor, living in another city, wanting cash flow for 2 years, with a big payment upfront. Refinanced the houses in 2008 for $128k, Still has not paid property taxes for 2015. 2008 appraisal:$188k Has been periodically taking loans to pay property taxes for other owned rentals - now sold- over the past few years. Ignores requests of repair list, and does not want to “alarm” tenants since they do not know of her intent to sell. PROPERTY:: Zoned MFR near an established area in that part of the city. Street has MF units across the street, and a mix of SFR and MFR on its own side too. 1 large lot House #1: 3/2/2, 1480 Sq.ft rented for $975 House #2: 3/2/2, 1455 Sq.ft rented for $950 House 1 & 2 are connected in the middle with their independent 2-car garages. Comps for SFR for similar homes $101k, so 2 VALUE PLAY: Convert the 2 conjoined garages (1 from each side) into an independent 2 story 2/1, 3rd unit. QUESTION: Seller cannot dictate the Price AND the Terms. I have never done an Owner-finance deal,so do not know how the numbers can be tweaked in my favor. All the experts in these kinds of deal structuring, please pitch in your suggestions.

Installment sale can help them circumvent a big tax bill in one go, or they can do owner financing. You have to figure out what is more important to the Seller: a fixed monthly income with lower capital gains taxes, or getting all the money at once with a big tax bill to pay. It will be all about creatively structuring the deal based on finding the actual outcome being anticipated by the Seller.

Originally posted by @Matt Fish:

@Aisha E. I agree with Ryland and Frank. You need to find another lender that will lend on the current value. Here in Delaware, I have not heard of a bank only willing to lend on the purchase price after renovations are complete. They are basically telling you they are only willing to give you a loan around 15% LTV and you should be able to find a lender to do 70%-75% LTV now that the project is complete. Talk to a lot of lenders, learn their standards, build relationships, and you will find better options.

Matt, 

The lenders prefer you take the loan from them before commencing on the rehab. I used my own cash to buy and rehab because I did not want to sit around twiddling my thumbs, as I had other work going. You are right 15% LTV is a joke. Maybe I can season the transaction for 6 months - 1 year, and in the meantime try talking to many smaller banks, and co-ops the establish a relationship like you suggested.

Not to sound like I am complaining, but it is much tougher for a woman of color to get into the "old boys club" network where everyone seems to scratch each other's backs. My learning curve to handling workers on the field over the years taught me a lot. I can write a whole thesis on women on the construction industry and the barriers to entry and progress. Like in any field, perseverance, and hard work demand success. 

Sam Valme Sam, thank you for the reassurance. I do not intend to give up, but it is extremely frustrating dealing with people who are desk analysts, and cannot think beyond the mainstream mindset. You are right the smaller regional banks, or the 2 branch in a town kind with actual investment banking mindset, and ability to approve by hopping over to the VP's office next door can get you an approval within a week. I know of a small bank here in the DFW area that gives rehab loans before one commences on a rehab project, as an acquisition and construction loan, that can be rolled over into a conventional loan at a slightly higher than market rate. At least one does not have to qualify for loans twice!

Andreas W. , I apologize for the late reply, but somehow I did not get any notice of being tagged in a post. I have a guy who specializes in refinishing tubs, tub surround tiles, sinks, and counters. Professionals first prepare the surface by lightly sanding it, and making minor repairs, hen applying a primer, and a few coats of an acrylic-based paint. You can match it to any surrounding tiles, or surfaces you want. To do a tub, he charges $275, and to do tub surround tiles, and the tub, $475. The only downside to it, like I mentioned in a comment above, is that you cannot use bleach based cleaners on it. Also the surface it not completely smooth and you get water beading on the flat surfaces. If you are only refinishing the wall tiles in the bathroom, go for it. For sinks, and tubs, I would think twice if it is for a rental property - you cannot control the cleaning agents the tenants use. Or just provide them with the non-ammonia based, non-bleach based cleaners on a monthly basis:-) If you are just doing it to sell the property, then go for it. I hope this helps.

Mr. Dotson, I have passed your office on Pioneer Pkwy so many times over the years. Welcome to The Bigger Pockets family.

Taylor Shields, you have a lot of knowledge depth in this area of REI, and are clearly an outside-the-box thinker. I recently was presented with a deal by a retired realtor trying to sell her inherited property in the DFW area. The interest thing about the property is that there are two houses conjoined on 1 lot that was at one time considered 2 lots. The plans for both the houses are different, and the part of the building that joins them are the 2-car garages. IMHO, in the surrounding area with MFRs we could reconfigure the 2 2-car garages into a 2 story small house. The 2 houses currently rent for $1000/month each. The owner/seller did a cash out refinance in 2008 to the tune of $128k based on an appraisal of $184k, and now wants to get $30k as a down payment, based on a $215k selling price, and owner finance it to the Buyer. She wants to be cashed out in 5 years. Considering her age, 70 years, it is understandable. I do not know the extant of repairs the houses need; both the tenants are long term ones. Property tax is around $4600/year, that she still has not paid for 2015! My question is: what kind of terms would you suggest to make it most beneficial considering she has an underlying loan, and the monthly gross cash flow is $2000.

@Sherry Patterson, I am in the same boat as you are. I have a daughter starting UT Austin this fall, and I live in Fort Worth area with no familiarity with the residential areas, and transportation routes in Austin. Maybe we should put our resources, or heads together to figure out he best route. My 2nd daughter may be joining the first daughter by next year. In my humble opinion it is better to own than throw away money in rent x2. Like you pointed out, property prices in Austin is astronomical compared to what we are used to in the DFW area.

Originally posted by @Account Closed:

What terms are you looking for? We have private money if you are interested. 

 What kind of loan programs do you have ? 

I am looking to build townhouses near downtown Houston on single adjacent lots based on a similar principal. Developmental cost is curtailed, land cost is divided over multiple structures, and you can always set a ratio on selling some and keeping some since you are dictating the quality of the housing in the neighborhood a few houses at a time. Another idea is going into an area in transition with other investors of the need be, and buying up, rehabbing, or demolishing and building anew. That way you bring up the ARV of neighborhoods block by block, and not wait for the transition cycle. For this you need to do a lot of research - market, job, city growth, transportation, etc to identify the areas that are in the paths of growth.