All Forum Posts by: James W.

I would prefer strong cash flow with little to no appreciation at this time.  Apprecion comes and goes both ways as well.  A place with nice cash flow and minimal appreciation should be able to whether a storm better than a place where you need to time the market to get out and make a decent profit.  

I'm currently in the process of buying a place with >25% cash return and will have minimal upside from an appreciation standpoint.  For me, if the cash don't flow, the deal's a no go!

Having experience selling FSBOs, I had to deal with many calls from realtors-and still do for listings that closed long ago... Everyone says the same thing. They have some sort of unique marketing system that will sell my house better than anyone else around. I have had some asking on how I price-which is an appraisal, but they have never been able to sell me on what they can do to make the deal go through. I can't speak for your average consumer, but the reality is that posting FSBO on MLS has gotten the deals done for me and it would be hard for me to pay more for someone else to answer the calls.

You may have luck with others that are not new to it, but personally, it would take a discount to make me consider it as I am not sure what you would be able to do that I am not able to do on my own. I can see how realtors would rather work with other agents than homeowners, but from my perspective, getting the home on MLS is what sells houses. I believe very few are sold based on a broker or agent relationship.

Now that systems have improved, FSBO listings have gotten easier where showings can be scheduled online without me even needing to pick up the phone.

One thing you might consider is offering a discount to sellers if they purchased a home using you or will use you to purchase their next home.  I used an agent to buy and he has offered a discount for listing my property if I sell down the road.  If you offer a discount to sell with the thought they may use you to buy their next property, it might be a win-win for both sides and you would still be better off than not getting the listing.

I wish you luck and think it is still worth a quick call, but the reality is that some may share the same viewpoint as me. 

Originally posted by @Account Closed:

@James W..  I like the way you think. I did my worst case scenario stress test.  By the end of the term, I would have paid off enough principal that I would not be too worried about being able to refinance again if I held it that long.  I also assumed that the cap rate would get worse for me when I sell because of the higher interest rates in the future.  With all this factored in, it is a great return for me 25%+.

Glad you though ahead on the deal.  I'm stuck working on smaller deals at this time but wish I could pull off a deal like that.  I would need to unload my other properties for the down payment though.  

Worst case, in 10 years, you definitely wouldn't be looked at as a new investor so that will help you quite a bit as well.  Hope the place works out well!

Nice job! I hope your analysis included reviewing it with market financing terms of a 20-25yr amort and a rate closer to 5-5.5%.  Hopefully you will have paid enough down by then where you can refi under conventional terms with enough down.

I would look at the deal closely to make sure it is actually a deal before considering seller financing.  There is usualy a reason it is offered (can't sell conventionally, poor condition, over prices...). 

Locally, I have seen several people trying to screw people over on properties offering short term financing with a decent down payment.  For example, one deal looked like what is shown below:

Price-$130k

Down payment-$30k

Loan terms 7% with a 1 year balloon

The reality is that the property he is trying to sell is not even worth $100k in it's current state.  

I have seen a few others selling properties with inflated values with a 5 year balloon and lower than market financing with a decent down payment as well. 

In both cases, the buyer would not be able to get financing on the property even meeting the loan terms.

Make sure to look at the deal closely and make sure you have an exit strategy in place! 

Your question is pretty vague. For example, some people may have started with a ton of cash, some people may be part time, some may get a lot of cash flow on a higher/lower return, some people may have just started or took time off... Regardless of the dollar numbers, you will need more info to make anything of the responses.

Most lenders like to see reported income from the property on your tax return. Some may use it if you have copies of leases and can show the payments coming into your account. Requirements will likely differ by the lender. Once you have been doing it a few years and your tax returns show the income, it will be easier to get credit for the income.

Yes. I have purchased properties years ago under my LLC and I’m in the process of moving them back to my personal name to lock into long-term conventional financing. Business loans seem to be somewhat competitive from the rate aspect, but usually have a 5 or 10 year rate reset and a shorter amortization. I plan on holding onto the property’s long-term, so it makes more sense to match the financing with my cash need to improve my cash flow. Unless you get a loan in the name of your business to pay off your conventional loan, the loan will always be on your credit report. I currently have one loan off of my credit report it as a business loan, and I will be converting that into the conforming loan in the near future. If you do not have much experience, or your business is new, it may be hard for you to get a loan in the name of your business in the first place. I would recommend leaving your existing financing if it is a conventional loan.

If you purchased the property in your individual name, filing a quit claim deed will not pull it off your credit history. You likely will not have any issues in filing a quit claim deed transferring it from your personal to business name, and the county will not notify the lender. The only way to get the property off of your credit report is to get a business loan in the name of your business. Changing the name on the title will have nothing to do with getting the loan off your credit report or helping your credit.

I have done it both ways using the quit claim deed form. I believe it is $52.70 to file in Hennepin county. I have been in the process of moving them back into my personal name for the purpose of conventional financing has Tim discussed. My business lender does not really care what name the properties are in and conventional terms are better than business terms anyways.