All Forum Posts by: Andrew Kiel

Quote from @Nicholas L.:

@Jake Benny

off market

 That sums it up perfectly!

Quote from @Jeremy Bourgeois:

Quote from @Andrew Kiel:

"Would I still be at risk here?" -YES

As someone who's done numerous owner finance and subject-to deals, I can attest to their value. However, as an assignor, you'd be taking on significant responsibility. If you proceed, thoroughly vet your buyer. A default or unethical action could leave you liable.

 Yeah that is the tough part, this deal is in a market I haven't been in before. In that situation, would you just try to find someone trustworthy enough to give you a referral fee say, instead of a formal contract assignment and have them just write up the offer so you aren't tied to it?

I personally would rather not have my name or company associated with a contract like that if I wasn't the end buyer.  I'd rather trust that someone pay an assignment fee (based on your word of mouth referral) and not get paid then the other scenario.

"Would I still be at risk here?" -YES

As someone who's done numerous owner finance and subject-to deals, I can attest to their value. However, as an assignor, you'd be taking on significant responsibility. If you proceed, thoroughly vet your buyer. A default or unethical action could leave you liable.

@Sean Haley - There are volumes of books and other information out there about seller financing.  I've purchased and sold many properties this way and feel it's a wonderful tool, but with risks.

In the most simple form, you sell the house to your tenant and get a note in return.  The risk is that you may have to foreclose on the property if they fail to make the payments.  That's probably the most important question you need to ask yourself - are you willing and prepared for that outcome?  In this case, since they are already in the property, you probably have a fair understanding of how they keep the house and what their payment history is.  However, even in the best of circumstances things like death, divorce, and disability can quickly change that.  I would also recommend that they have sufficient 'skin in the game' IE additional down payment above and beyond just having lived there a while.  It's far less likely you'll foreclose on someone who puts 20-25% down than 0-5%.

Seek out someone with experience to help you, a real estate agent, title agent, and/or attorney are great places to start.  Just beware, most of these 'experts' are not experts on seller financing.  

Also, you may want to consider using a note servicer (in my area many title companies offer this service).  They will be the intermediary to collect the funds, get you paid, and send the notices (and handle the foreclosure) if needed.

John is still actively buying real estate as well as teaching.  Ken is referring to my mentor, John Burley, who I am incredibly grateful for. 

This is some great information for anyone looking to better understand creative financing/wraps/subject to transactions. @Account Closed - it's great to see other active practitioners that are willing to share their real world knowledge!

When I analyze a property that I've owned for a while I start by looking at one key number - return on equity.  Based on your numbers it looks like around 90k in real equity (how much cash can you really get if you sell, not the paper equity).  With the projected rents, even after a refinance, your ROE is a negative number.  Another question I like to ask is "would I want to own 10 more just like this property?".  

"Who needs the bank" by Bob Zachmeier is a great, fast read on the basics of owner financing.  I'd start here before going down the rabbit hole...

Meetup link here:  https://www.meetup.com/bwtrei/events/300176100/

I fully agree with @Mary Smith and @Theresa Harris.  I no longer care to hear why someone can't pay rent, only when.  After being burned more times than I care to admit to, I've realized I'm a business, not a charity.  They made an agreement with you when they signed the lease and they are now breaking that agreement.  You are simply reacting to their CHOICE to not pay rent timely when you take proactive action to break the lease, request they move, or evict.