All Forum Posts by: Arcinio Arauz

This is the reason I post here...to get feedback. Your feedback has always been constant with what I was already thinking but just wanted to see if there any other possible solutions.
Yes she wants way too much for her homes, yes the balloon payments are crazy and her rental income versus expenses is out of wack also. So far nobody has come up with alternatives though. I wanted to play dumb but I'm really not. I was born at night but not last night. I through this out to see if anyone can come up with a better plan. One positive aspect is that the owner is willing to listen and open to options that work for both of us. Just need help figuring it out. Thanks for reading.

Yes indeed, she's not your average run of the mill old lady. She has 30 other properties has been doing RE for 50 years. She doesn't need hearing aids, no eyeglasses, no medications, no cane to walk with and no shaking. She's been smoking since she was 10, smokes a pack a day, builds fences, spits on the ground, collects rents in person and calls the shots. For those of you that mentioned "unethical"...if anything she may be taking advantage of me! I would rather suffer affliction myself versus doing ill harm to the old lady. Also, the daughter was with us at the table to discuss the deal. I was also the one that recommended that they put their properties in a trust versus having them in her name for asset protection estate planning. So no, I'm not banking or hoping for anyone to die. It was just something that I thought of as a "what if".
Worst case scenario: I get 5 properties with 0 down, less than 2% on a 30 year note and no cash flow and tenants basically pay for my note.
I'm not looking for current cashflow as some of you...that may be all you think of. I think of the future; When I'm 62 years old I own 5 more properties by allowing tenants to pay the note for me and I never invested a single dollar (save some repairs). As for maintenance: ALL her homes are a +10, new roof, new AC units, new paint, new flooring and ect. I won't need to do anything for a long while, especially since she also has good current long term tenants.

But yes the balloon payments are something to reconsider.

I guess you must not see what I see....
It's not always about getting a house for market value or below value. What's more important is the terms or condition of the deal.
0 down,
100% carry
no liens free from any other set backs in great locations.
This isn't a quick cash maker. In the long run, I hold title and like she says, she wont be around in 30 years (with no heirs). So what do you think will happen to the note or the additional 25k payments with no heirs?

I just want to straight forward ask why do so many RE gurus spend so much time trying to sell their material, DVDs, training courses, VIP guides, kits and so on. Every webinar ends with "buy now, only 20 spots left". They are professional salemen to the T! Statements like "this will change your life" and "sit at home and never talk to a seller, never talk a buyer, never even see the house and make 12K!" YEA RIGHT! All the deals I've done cost me my time and my effort. Was it worth it...yes but I just don't believe you can make it big in REI by sitting at home all day behind a computer. I get tons of spam and even phone calls of them trying to sucker me to buy their "state of the art software".

I guess I'm just old school but I believe in personally driving around, personally talking to owners and personally making the deal happen. This is stuff that fewer and fewer people are doing. They're getting caught up in all this REI web/internet hype.

Thanks for hearing my rant.

She wants 100K as a down on the 600k.
Four 25K balloon payments (additional) every five years. Hope that helps.

I went for a revisit and coffee session today .After some time, her homes came up for conversation.
Here's the break down....

Five homes free and clear,
owner 82 years old/ daughter 55 years old
Income cashflow:$3025 per month
Expenses (taxes/insur): $890 per month
Current market value: $350K
Repairs: none, all homes have long term tenants and need nothing at this point

So she asked what I thought about the homes and what I planned to do if I bought them. I honestly told her I would like to keep them long term as income and for my kids in the future. I then told her what the market values were and she grimaced, stating that she would rather die versus selling them for current market price ($350K). So then I remembered reading that Jack Miller says its ok to pay more as long as the terms work out. So I presented to her that I can buy them for her asking price of 600K only if she carries paper. She asked how much I wanted to put down and I told her I had my money tied up. So said " no problem can you make balloon payments on the down".
She's willing to carry the whole package deal with nothing down. She'll get $2,070 a month for 30 years with 1.75%.
She mentioned that the interest is low and she normally would ask for 7% and that in 30 years she or her daughter won't be alive. She has no other heirs nor wants to give to any charities. She mentions a 15 year note. So I figure I would present to her again the fact that she'll collect 2k a month and every five years I can give her a 25K balloon payment for the 100k she wanted down. She liked that idea but then asked about the closing cost and 3.5% state taxes she'll pay on the sale of each home. I told her I'll go to title and get an exact amount to close and inquire on how to divert those taxes. I think if I cover the closing and work some way for her not to pay the taxes...she'll move on the deal. She is not interested in a lease option as she stated that if she sells, she wants title to transfer, get away from paying taxes and insurance and carry the paper.
We so are close to making this deal... I just need some help on the lose ends. We'll meet again soon.

What if she mentions that 7% interest rate again?

What if she mentions the " we won't be around in 30 years again"?

Is there any way to get away from her paying those taxes to the state?

Ann Bellamy... you said something that stood out to me..."friends and family". After some reading and research I am becoming more educated on how hard money works and how "hard" it is. My best option at this point is to go talk to my grandma. She's soft and I think I can borrow 75K from her while I pay her back 90K on terms with no skin an no collateral.

I just want some help on understanding hard money. I need to borrow funds to use as a down on five free and clear homes. The owner will take 75K as a down for all five and carry the rest of paper. Values of all homes together is about 470K. So I call a private lender and they want me to give them 30K-35K in order for me to borrow their 75K. What part of hard money I'm I getting wrong? I don't have the funds, thus my reason for asking. If I had the 35K I may negotiate something different with owner. So simply put... I need to borrow money because I don't have any, yet their asking me to throw down $35k of which I don't have to use their 75K? Please school me on this.

Thanks for the responses. As for California prices...yes it would cost at least 10k just to tear the house down and remove. It may even be closer to 12k. Also, very few houses in Ca have basements, so a fill in isn't anything to worry about. What I may do is advertise the house (not the lot) as for sale as is to a rebabber/flipper. I'm thinking 30k minus 15K for tear down...I'll be happy to have a highest bidder sale and sell to the highest bidder starting at 15K.
How does this sound....

" Burnt house for sale to the highest bidder. 3 bed 2 bath, 1260 sqft on 6k lot in a nice established and quite neighborhood. Rent was $900 per month. ARV 130K Taxes payed, free and clear, no liens. House need lots of work even a full rebab due to fire damage. Bid starts at 15K cash buyers only."

What's the best way to get a good long term tenant.I guess one may never know until they determine after a year or two if rents have been payed on time. A general rental application and agreement isn't a problem but what about a credit check. How can I get a copy of their history without having the liability of running their credit.