All Forum Posts by: Chris Soignier

 1. I won't originate a note for less than 9.9%, and I'd argue that notes are easier to sell than houses b/c they're more of a commodity, w/ only a handful of factors determining value.   You can certainly close faster on them!

2. I had 34% appreciation in the nanosecond I owned my last seller financed house.   How long will it take you to match that in a rental?

3. Not necessarily true.   If the house has a sub to or amortizing seller financed note at a lower interest rate than the buyer's note, equity will increase over time.

5. Buyers often pay for servicing, and the servicer makes it simple.   Even so, it only runs ~$25/month.

6. True, but cash for keys works for both tenants and SF buyers.

7. That's the servicer's job.

8. No problem, there's plenty of profit on the front end earned presumably for providing financing over the term of the loan.    Having a sale or refinance means you earned it w/o having to tie up your capital over the full loan term, and can rinse or repeat another deal.   Honestly, I wouldn't do seller finance if I expected buyers to pay on the note through maturity; the rate is high enough to motivate them to improve their credit and refinance as soon as they can.

I'm not trying to suggest seller financing is better than rentals, just clearing up some misconceptions.

I use firstname at lastname dot com.

You might want to check w/ an attorney, but in general Texas does not seem to have strong laws protecting ownership of books of business.   Ultimately, PM is a relationship business, and the clients are going to decide who they want to manage their property.

Have you considered investing in MF as a passive?    You wouldn't have to worry about management in your limited time, and it would eliminate geography as a barrier.  Your investment could also likely benefit from economies of scale by going into a large complex that can support professional on-site staff, whereas small apartments get a limited benefit from that.

What's to preclude you from doing seller finance if you pay cash? I bought my first seller finance house last year w/ cash in my Roth IRA, and it was the best transaction I did last year. Missing out on appreciation? I bought and sold that house in a back-to-back closing, booking a $30K gain on a net $87K investment. How many years do you need to own a rental to realize that kind of appreciation?

As y'all might have guessed by now, I'm a big fan of seller finance. I have the rental thing covered w/ my MF interest and a SFR rental. After experiencing most every strategy in SFR investing, I came to appreciate that my core competencies carried from my pre-RE career are in finance, not construction or property management. For this reason, I'm primarily focused on seller finance going forward. I have no interest in selling anyone on it, and buy-hold may indeed be a preferred methodology for others.

Your train of thought mostly ends up w/ the right result, ex. that your way of getting there is a bit unconventional.     First off, net income, not cash flow, is the basis for income tax calculations.

You start w/ rent collected, then deduct interest, property taxes, maintenance, depreciation, utilities, etc., to arrive at a net income for the property.    Principal reduction is not deductible, but look on the bright side - your tenant is paying your mortgage, you depreciate the property, and usually get to benefit from appreciation.

@Wayne Brooks, the earnest money is not spelled out in days, I posted the exact language above.   I interpret it to mean same day, others might not.    Everything else is spelled out clearly w/ respect to timelines.

@Bryan O., the TREC contract specifies, "Upon execution of this contract by all parties, Buyer shall deposit $x,xxx as earnest money with _______________ (as escrow agent)....If Buyer fails to deposit the earnest money as required by this contract, Buyer will be in default.

Today is 4 days following execution, and neither the earnest nor option money has been received.   Option money is due 3 days from execution, so there technically is no option on the contract. (though I realize there are other ways to weasel out of a contract prior to closing).    The agent was in Vegas this weekend, but to the best of my knowledge that doesn't provide for an adjustment to any deadlines.   ;)

Meanwhile, the other offer is being submitted as a backup, and to strengthen it they're changing the repair language to "as-is, where-is, with no seller repairs".

 If you finance it and sell it right, you'll have a negative net investment at time of sale and will have already gotten all your cash out of the deal and made a healthy profit.

Unless you're selling w/ a contract for deed, you don't technically still own the property when you seller finance.    Also, when you lease a property, you are relinquishing control of that property (subject to the lease terms, of course) during the lease.