All Forum Posts by: Justin Koopmans

Hey everyone! I'm in talks with a private seller to purchase vacant land. We have been talking directly without agents. Three questions: 

1) do California Realtors have a seller financing addendum that they can use? 

2) is there a resource that someone could point me to for a customizable seller finance contract template that we could look into?

3) Any CA attorneys out there experienced in seller finance purchases that you could recommend? 

I looked at Law Depot online but that template won't work for us as it requires an interest rate to be input. Our terms may not have an interest rate attached to it. The current discussion is that we'll agree on a payment and then "x" amount of each payment (same every month) will go to principal (instead of following an amortization schedule). 

Thanks!

I would bet that the cost of the land is contributing to the $4M cost - although that does still seem high.. but I'm not super familiar with Truckee market. 

@Noah Laker what kind of properties are you buying in Sac to turn into STRs? Single family homes? I'm an investor that lives in Amador county (near you), but I've struggled to make the numbers work for STR near me.

@Joe Bertolino - pretty rural - Amador county

@Patrick M. You are correct, I realized that after I already posted my topic that I'm not really asking about appreciation. What I'm really asking about is equity. Should I buy an asset that has $50k equity but lose money on it every month? That's the dilemma I'm facing. The responses have all been super helpful. The market does seem high so would it be wise to buy something (even under valued) because the market could turn and then that equity is gone...? But like @Michael C Williams said, it is a steal in my market to get something at that much of a discount. 

To answer the comments about why the seller would sell to me at a discount - I know them personally and they'd rather sell to me then go through the hassle of getting it ready to be listed. That's all :) as such I also wouldn't want to tell them that my intention is to keep it if it wasn't.

Thank you everyone! Wow, lots of responses! I really appreciate that. @Michael C Williams The two properties in question are in rural outskirts of Sacramento. 

Hey BP!

Got a couple off-market deals I'm considering in Northern CA but I've got some "newbie" dilemmas going into them and it's this - these deals seem like great deals (like $50k-$100k less than what they are worth) - but even at these discounts they do NOT cash flow after accounting for repairs, management, vacancy, etc (they do "cash flow" in that it covers the mortgage and has a little bit left over... but that's obviously not true cash flow). 

I understand that I could purchase these homes and flip them for profit but that's not my game plan (nor would the seller sell to me if that was my strategy). I'm seeking buy and hold rentals. Other buy and holders in Northern CA and similar markets - are you content with a deal like this where you're in the hole $300/month with the long term vision of either increasing rents or selling in the future for a big payday? 

Part of me feels dumb not to jump on the deal for the equity but the other part looks at the numbers and wonders why I would buy something that puts me negative $300/mo haha!

Seems like a pretty good one from those numbers - at least on the cash flow side - I think the bigger question may be "what is your goal with it?" - how long do you plan to keep it? If it's only a year or two then paying $50k over might not be a good move. But if you can "ride out the storm" (per se) for several years then overpaying won't matter because you'll be making money every year with your cash flow.  

But what about repairs / capex? How much do you think you need to set aside for those? That might change your numbers a little bit.

Thank you @Dale Desmond! Those numbers are definitely helpful. Funny that 2020 was so much higher, but I guess it makes sense. And good news on the larger units being occupied more!

@Kevin Hill thanks for the referral!