All Forum Posts by: Seth Williams

Hey @Eric Rosiello We are pretty close to one another, and I grew up in the Lynn / Saugus area, now living in Winthrop. I was in a similar boat as you, but then since I was managing so well my friends started asking if I would manage their stuff as well, and so I have! Im available to chat with you at any time, not a huge company but am super local to you. Let me know if you want to chat more. 

@Colby Fryar Those are really awesome terms....For you! I would imagine if you throw some interest in there ( not a bad thing ) he will go to a 30 year term. You Also can literally do WHATEVER you want in order to get the best deal. For instance, you could do 1-2-3-4% interest, and do a 30 year term, 40 year term or whatever, and add a Balloon Payment, meaning in X many years ( typically, 5, 7, 10 ) the final payment of the balance is due. 

On a deal I did, I did 5% interest ( better than bank ) and a 30 year term, 5 year balloon, but I am in a drastically appreciating area where the property is worth way more now. Since its worth way more, only 18 months into the deal I am going to a bank and doing a cash out refi, taking some more equity and buying the next place, all while paying the previous owner, and my bank ( the guy ) off way earlier, as you can imagine this is awesome for everyone. 

Zero % interest is awesome though, I want to point that out. You never want to pay more than you have too. The good thing is interest sometimes will off set your rental gains, depending on the rate. I agree with what @Hadar Orkibi and @John Casmon said, You need to find an Atty to help you out and explain this process to them. 

People do owner financing because its awesome, and you can do less than 20% down, since there are no rules. People typically have to put that much down to satisfy bank regulations. You may be able to put less down, save your cash, and get a higher rate? Work the terms as much as possible, but put the buildings under agreement in the meantime. You can lock the buildings up with the clause of "Subject to seller financing at agreed upon terms" and since they are under agreement now you just work the terms out well in advance. 

Hope this all helps. Id search a few books too on seller financing, a lot of the BP stuff covers it though. 

The residential fixed loan rate is going to be way better then the commercial, which more than likely will fluctuate. I’d go cash out refi and keep it clean. 

If your on title you could also pull a HELOC aka a home equity line of credit. Might be cheaper money depending on the bank and increase cash flow.

Hey Paul, Do you already have someone in mind / a firm in mind in order to fund? Having done a few seller financing deals I can tell you its actually a lot easier than people think. The attys typically can set up everything from Note, to Mortgage, and..at least here in Massachusetts, they usually request the wire from the private lender, pay off any current mortgages by requesting pay offs and so on. You literally can simply just discuss what terms you want, and then go from there. 

The deal I did - they did require I take the property in a LLC, which was fine, and carry a certain level of insurance with them as the payee in case of loss. Its essentially like purchasing a house cash, just using someone elses so there isnt really a need for a commitment letter so to speak, its more like proof of funds. I dont expect you could get the funds pre-closing, as the atty should always keep it to protect everyone.

Lastly, when it comes to payments, you have the option of getting a servicing company involved that would send you bills just like anything else per the terms of the loan, however, this adds costs since it takes some profit away from the private lender. I opted to just keep track of it myself, and as does my CPA, so they know how much I pay towards interest, principle etc & make sure its taken care of every year on taxes. 

Hope this helps, let me know if I can assist in anyway! 

This would be best answered by your banker, sometimes they do require a personal guarantee, its all going to depend on what they, being the bank, want. Commercially though the loan is backed by the physical property, but ive seen it done both ways, just double check with them. @Upen Patel, thoughts? 

Tons of banks will lend to LLCs, you may just have to personally guarantee the loan. Also, look for some local banks like credit unions and the sort. Banks will often lend to investors in the area with some experience. The bank does whats call a portfolio loan, meaning they dont sell the loan to the secondary mortgage market so they can break the rules a bit. If they see it to be a good deal ( cap Rate, Debt service coverage ) then they will proceed. Do some digging on it, and talk to your local banks! Good luck. 

And @Zach Lemke is on point here, if you have an interest only loan, you will obviously never decrease the original loan balance, and since its interest only its just the original loan amount, 147k he mentioned. x. .07, for 7 % interest, / 12. No amortization needed since you mentioned interest only. I still stand by my original post. 

@Angel Dejesus shoot me a PM, Im a real estate agent in Boston, and am familiar with and have done deals in Seller Financing before. To be honest, im not sure why you would do 20% down and 7 % interest...You can go get a conventional product from a bank with 20 % down out here. Further, 7 % is crazy right now, and if the reason you are going seller financing is because a bank wont finance it, save your money and buy a  better deal. 

I can send you some good tools on top of the BP stuff to analyze the deal too. 

Hey All, came across a deal im analyzing and had some questions. The long story short is the 8 unit has 8 gas meters for the units cooking, but the 9th meter is the house meter and fires and OLD furnace, I have all the utility bills including the bad winter months. 

I remember reading on here that there are ways to separate cost of utilities based on ownership %, or rental % etc, But I cant remember the strategy, what it was called and so on. I know obviously I could purchase and add 8 new heating systems and it would be a great value add, but obviously costly. 

In Massachusetts, does anyone know the legality, and if this previously mentioned unnamed strategy would work? That way I could just replace the boiler, if I wanted to, with one, and still pass on the utility cost. 

Ill probably go the route of 8 new boilers if I do close, but was thinking about this and wanted some hot takes. Thanks BP.

So rates, we just closed on a deal Wednesday, was a 4.875%...It can adjust after 5 years, but cant go up more than 200 Bps or 2 % points. Basically the way it works is if you have a ton of equity in property, you essentially refinance it at the same time you buy something else...So the bank out here takes property A that you own, and appraises it which you pay for ( commercial appraisals are more expensive ) and then takes property B, something you are under agreement on, and appraises it, and as long as you have equity in prop A, you can use it instead of Cash on Prop B. This all gets into one Mega loan. Make sense?

Example: you own prop A worth 1 million, and owe 600k. You Put it up as collateral towards prob b, another 1 million, which you will need 200k to buy. You can either use cash you have and put 200 k down, or put up prop a towards the two together. Thus making one 1.6 million loan vs. 2 mil in property. All of this has to meet criteria, IE. Appraisal, Cap Rate that suits bank, and DSCR or Debt Service coverage ratio...Banks usually want over a 1.2 Ratio. In other words, it takes monthly profit / debt, so rent - expenses divided by debt service monthly.

Hope this helps, start with credit unions, they are going to be the best by far.