All Forum Posts by: John Cardinale

Quote from @Kyle N.:

I've got a potential duplex deal where seller owes about $115k at 2.5% and is tired of the headache.  They just want it gone, and are open to me making payments to them.  The initial price they threw out was $240K, which is probably fair.  I feel I've developed a solid relationship with seller, and I want to help them out, but need to find common ground where we both win.  I've never done any sort of creative finance before.  I would obviously like to keep the [email protected]%, but curious as how to structure terms for the remaining $125K back to the seller.  How would you structure, or do you have any good resources (Posts, podcasts, videos, books) that would help paint a clearer picture?  

Current knowns:

Rent: $1050 each side (at least $200 under market rent)

Taxes $4,500/yr

Insurance: $1,500/yr

Tenants pay all utilities, mow and snow

One idea I have is to offer full price of $240k payable to the seller over a 30yr period at 2.5%.  That way my payment to them is almost double what I anticipate they are paying on their current mortgage.  After my conservative estimates, it barely cash flows for me, but I could bump rents fairly easily to help that.  Seller made a comment that this duplex was her 401(k), so by me making ~$950/mo payments to her for 30 years might do the trick?  I would have to figure out the details of ensuring sellers are paying the bank, or maybe I make the bank payments and send the remainder to the seller.  

Any guidance would be greatly appreciated!!

I’m pretty sure the only safe way to do this to get the property in your name, which is definitely your main priority, is to do a sale subject to the existing mortgage, and then an owner finance with seller holding 2nd position mortgage. Try doing a little reading on “subject to” transactions. 

Not sure if this will work as I haven't been in this situation but my first thoughts are: sub to the 77,000 assuming the interest rate is ideal to allow son to keep a low monthly payment; then let Mom hold back a second mortgage on the rest for 208,000? I'm no expert but just trying to think creatively here. Let's see what other ideas are thought up.

the main trick is to be creative and ask! make the offers and you will find them.. use owner financing as a search filter to find them.

Quote from @Mike Wood:

Quote from @John Cardinale:

I'm interested in Padsplit in the New Orleans market and had the same questions the last time I analyzed it. I'm wondering if the same lenders who financing STR's would consider Padspits.

You may want to check this, but I would imagine that renting via Padsplit would be considered as a STR which have been highly restricted in the city of New Orleans, and the only way you can get a permit recently is to also live in the property.

from my understand STR is anything less than 30 days and padsplit is at least 30 days so I should be good there.

Interesting... I've run numbers on BTR versus BRRRRing existing and the BRRRR option seems to make more sense in my market. How does it compare where you are? what key factors make BTR best for your situation?

I noticed Padsplit has a preferred lenders page with several companies listed. 

https://www.padsplit.com/host/get-on-board/vendor-network-re...

seems like you need to find the cheapest loan you can get that's 30 year rate. What are your plans for this property? If you want flexibility with the loan, why not a HELOC? Or of you already have a specific purpose for your cash-out money and wanna lock in the rate, then the cash out mortgage option may be best.

I'm interested in Padsplit in the New Orleans market and had the same questions the last time I analyzed it. I'm wondering if the same lenders who financing STR's would consider Padspits.

So it seems like the best case for financing is to be able to convert and existing rental to a padsplit after financing is already in place. Or some other alternate financing at least.

One detail I failed to mention is how good the owner financing would be. 10 percent down at 5 percent interest for 8 years. To take advantage of those killer stats, my exit strategy has to include the owner, which a traditional BRRRR wouldn't allow.