All Forum Posts by: Ben Scott

This is anecdotal, of course, but I operate two Air BNBs in the Oklahoma City area. I recently got my special exemption permit from the city (I'd run afoul of the law for too long) and there were at least 20 other home owners seeking a special exemption to operate a short term rental. I do wonder at one point does the market become saturated. Of course, those providing the best experience will rise to the top. 

@John McKee Think of the seller like a bank. When you purchase a home with bank financing, the bank doesn't hold the title. The buyer takes title in his/her name with a promissory note to the bank to pay the mortgage each month. Same principle with owner finance. If the buyer defaults, the lender (in this case being the seller) can foreclose and take back title. I'm an agent in Oklahoma and we have a Seller Finance addendum written up by the state real estate commission that functions just like an FHA or Conventional Loan addendum to a sales contract.

This is, of course, standard when you purchase a home with bank financing. But some buyers that use seller financing don't take the same steps (taking title in their name and closing at a title company) because they don't know any better. 

As a landlord and property manager, I've taken numerous calls from people who needed a place to rent ASAP because their landlord sold the house they were in out from under them. All the while, that tenant thought they had a rent-to-own or seller finance deal set up.

I know he's your brother. But there is a lot of risk in giving him 50% ownership of the asset with none of the liability.  

Make sure to close the transaction at a title company and have the deed and title put into your name. This protects you if the lender/seller passes away or would try to sell the property out from under you and your seller finance agreement. It's worth the $1k or so to take the correct measures. I've heard from several people who thought they had an owner finance agreement signed at the kitchen table, assumed they were paying down equity only to have the house sold right out from under them.

I'd recommend finding a trusted agent in the market you want to invest, whether that be through referrals or BP agent finder. I wouldn't trust a wholesaler, who is not obligated to provide a fudiciary duty, to provide accurate square footage, rehab budget, comps, etc. 

How do you handle the value add portion of the transaction?

I'd ask the lender to itemize the closing costs. Is the lender a bank or a private money lender? If your rate is 4.59, you've likely bought down 2 points which could be several thousand dollars.

Also, this loan looks to be interest only? If that's the case, no monthly payments would be going to the principal which is not a good way to build equity.

In my experience, I'd pursue a landlord insurance policy. As my insurance agents tell its, the umbrella policy is appropriate when you have multilple investments and need coverage beyond just one property.

We just confronted this issue taking on 23 doors. We started with a letter to each tenant, letting them know a new company would be managing their home. Then we reached out to each tenant individually after the letters hit. This way, the tenants weren't broadsided with a phone call. 

We also set a definitive date as to when the new property management company would take over. 

Congrats on the apartment complex!

Seems like the extra seller credit should be a credit to you on the title company's settlement statement. I've represented doctor's who got physicians loans and they were issued a check from title at closing. 

Congrats on your deal and starting over with renewed motivation. Where in OKC is your investment located?