All Forum Posts by: Ben Morand

@Rachel H. Thanks so much Rachel!

Hey guys! My name is Ben Morand and I am a 20 year old college student interested in buy & hold investing. Right now, I am just trying to gain as much knowledge as I can and build connections, as I am so eager to get started in the real estate investing world.

So currently, I am trying to learn the various ways to creatively finance my first deal. I am looking to do this because as a college student, I lack steady income and cash on hand, so it doesn't seem very likely that I'd be eligible to qualify for a conventional loan. While I've looked into hard money and FHA 203k loans, another option that I've considered is seller financing.

I’ve read Brandon Turner’s Book on Investing With No (and Low) Money Down, so I have a general understanding of several creative financing solutions. However, I still have several questions about seller financing, so if anyone would be willing to give some insight, I’d greatly appreciate it!

1) How common is it to find a seller that is willing to do seller financing? I know this is a bit of an ambiguous question, but I basically am wondering if it happens often (because from what I know about it, it seems like an amazing opportunity for both the buyer and the seller).

2) Is it hard to obtain without steady income? For my situation in particular, I do not have the steady income required to take on a conventional loan, so being able to work with seller financing instead would be ideal. I also am wondering because as far as I know, the seller’s property is used as collateral so if the buyer is unable to fulfill the loan, the seller gets the property back anyways. Is this generally how it works?

3) Going off of my last question, because the property is used as collateral and the seller gets it back if the buyer is unable to fulfill their side of the loan, is it common to see 0% down? Or do sellers usually still require a down payment? (sorry if this sounds a bit simple, I am just trying to understand the potential scenarios that can come out of such a deal)

4) What are interest rates typically like for seller financing? I’m assuming they are higher than a 30 year fixed rate, but how do they generally compare? Also, are the terms usually long spread (20-30 years) or shorter spread (1-5 years)?

5) Where do people usually search for properties that would be more open to seller financing? I know for this to work well, the seller needs to have a hefty amount of equity in the property, but most property owners do not, so I am just wondering if there is a way to know this before contacting the owner (or owner’s agent)?

Thank you in advance to anyone willing to give insight! I really really appreciate it. As a new and aspiring investor, I am so eager to put myself out there and take action towards my first deal.

I am open to any and all comments and would love to connect with others for the future if you’d like!

Thanks everyone!

@Derrick Dill Thanks so much Derrick. It’s very reassuring to see more experienced individuals in the industry providing insight. I really appreciate it!

@Jenni Utz Jenni, thank you so much for your clarifications! Your insight really helped a lot. Would you say that you could potentially use a hard money lender to initially pay off the rehab until the banks reimburse you? Also, just another question that came up in my mind: can the FHA 203k loan be applied to small, 2-4 unit properties such as a duplex, or are they generally only available for SFR? I appreciate your help!

Hey guys! My name is Ben Morand and I am a 20 year old college student based out of Orlando, FL. So right now, I am looking to get started with my first deal. However, as a college student, I lack consistent income and hefty cash savings (my credit score is solid, however). Because of this I am exploring the various methods of creative financing in hopes to find one that suits my situation.

I have read Brandon Turner’s Book on Investing With No (and Low) Money down, so I have a general idea of several different methods. However, I feel that I could definitely benefit from hearing from experienced investors who have a much deeper knowledge than myself.

One method that interests me in regards to my current situation is an FHA 203k loan. This interests me because if I can find a solid flip, I can utilize the BRRRR strategy and make what I have work for me. I have a few questions regarding this type of loan, so if anyone would be willing to help, I'd greatly appreciate it.

1) How common are these types of loans? I hear that not all mortgage brokers are able to do this sort of loan, but I know that I’ve heard that a few people in the Bigger Pockets podcasts (including Brandon Turner I believe) have utilized it for their first purchase.

2) How long does the process generally take? So I know you have to have a lot of extra paperwork completed when utilizing this type of loan, as well as get contractor estimates, etc but in general, does this loan typically take weeks, months, etc to get approved? I am wondering because it seems that you could miss out on some deals with the process taking as long as it does. (sorry this may sound like a dumb question, but I have never purchased a property before so I’m not exactly sure how the pre-approval process actually works)

3) For the repairs to the property, do you have to use a general contractor that the mortgage lender assigns to manage the project? I’ve heard from some sources that you do. Is this generally more expensive than finding contractors yourself?

4) Like a traditional FHA loan, are you still able to only put 3.5% down on the total price of the property + rehab (ex. $30,000 price + $35,000 rehab = $65,000 loan amount)? This would be incredible for my situation if this is how it works.

5) Because I have no source of consistent income, would I be able to add my parents to the loan and use their income to compensate for the DTI requirement? Beyond that, I have enough cash savings to fund a down payment and a solid credit score.

Again, thank you so much to everyone that is able to help. I am thrilled to have learned about this industry a few months back, and I am trying to learn what I can, while also not getting stuck in analysis paralysis. I am open to any feedback and connections! I appreciate it guys!

@Moises R Cosme For sure! Thank you so much for your insight. I definitely do not want to get over my head when just starting out. I appreciate you taking the time to help me analyze the deal, and I’ll definitely take all of your input into consideration going forward.

@Odie Ayaga Thank you so much Odie! I definitely will do a ton more research on it. Right now, I am trying to learn the various ways of creative financing and find something that would work well for my particular situation. I originally thought that hard money would suit my situation well, but after reading everyone's insights, I now understand that there is a lot more to it than I thought. I will probably also write some posts about seller financing and FHA 203k loans in the next few hours. I'll definitely connect, however, and shoot you a PM as well. I appreciate your help!

@AJ Shepard I appreciate it AJ! I feel pretty overwhelmed with the financing aspect of my first deal so I am trying to soak up all of the knowledge and connections that I can before I jump in to any deal.

@Moises R Cosme Thank you Moises for your insight! I totally agree that there are a number of additional aspects to take into consideration.

@Rodney Robinson Hey Rodney. It is in livable condition, however, it is in a MHP so I will need to reconsider my numbers with that in mind.