All Forum Posts by: Kevin Kaczmarek

I would get insured to 100K as a thought starter. The insurance company is going to scrutinize the payout of total loss and 100k would cover market value, and carrying costs. Protect your initial investment, but don't go overboard. In the economic climate we are in there are way to many parts of the country where you would never get a proper value of your asset in line with construction costs. When that line crosses over, I would re-evaluate then.

checkout yellowlettermail.com. Michael the owner is on here and a great resource of marketing ideas and applications.

Michael,

Reverse Mortgages tend to be a scammer's playground. Be very careful. Properly structured a reverse mortgage can be a great avenue for those nearing or in retirement as a means of income. Find the best reverse mortgage expert on here (not sure who) and pick their brain. They will help you navigate companies with unethical practices.

I know this doesn't directly answer your question, but it will help you from getting involved in something that can prevent the beauty of wholesaling (speed and quick profit)from happening.

Kaaren rocks!

I think my reply got deleted or never posted

Shawn, I do get some resistance on the "until paid in full" and I know its not for every seller, but if they are open to seller financing, the until paid in full is less of a hurdle when you start negotiating back and forth. Its a numbers game, and the more offers you make, the closer you are to that goal.

Adam,

On the calculators, its always good to review what is the present value of a all cash offer to what a seller financed offer. $25K cash sale might be the same as $25K with seller financing at 5% interest over 10 years, but there is so much more value in paying that property down over time, and having others pay it for you.

I generally find my sellers with direct mail non-owner occupied letters. It is often the very investor who got into real estate years ago that is looking to get out now. By presenting an offer of terms, you may be creating an annuity of payments without the hassle they were always hoping for when they got into the business.

As for making offers, I would suggest some advice that I often have to remind myself of, when making offers with seller financing. It is not my decision to accept or reject the offer I present, all I can do is present it. You and I might not do the deal, and not budge on price, but someone else might, and their circumstance is different. So, I wouldn't stress to much about why you wouldn't accept the offer, just present it and see what happens. It at least opens dialogue.

David,

Check your contract asap, as some management companies require you to notify them 60 days prior to contract expiration of non renewal.

It might be a pain to deal with in the last month, but ask them how they would suggest the last month rent be handled.
They may come back and say they will handle the last month for you, or they may tell you to figure it out on your own. If they tell you to figure it out on your own, I would suggest contacting the tenant and letting them know that you will be managing the property.

Communication is the key to making this transition less stressful. I applaud you that you are proactive about this.

George,

I would suggest taking the ethical dilemma out of it and agree to purchase at a nominal interest rate that satisfies the law, protects the seller from penalties and still gives you a great deal.

I have negotiated several deals where I could get 0% interest, and actually did get 0% on one of my first deals. We have since done an addendum to satisfy the IRS. Makes the seller happy to know you are looking out for them, and you go to bed at night knowing you are not doing anything wrong.

Hi Adam,

Great concept and great question. I have bought several properties in the last six months using this exact method and I can tell you there is no science formula to it. It is all in negotiation between the seller and you.

I would suggest brushing up on future and present value calculations as you start making offers, only because it will help you identify what your offer is in relation to what a cash offer would be.

Couple rules of thumb I follow.

#1.) I do not pay retail just because I am buying on terms.
#2.) I always say "until paid in full" as it relates to the term. I do not do balloons on my purchase.
#3.) I tend to put $1-$2K down
#4.) I negotiate an interest rate close to current market rates with no adjustments
#5.) The deal has to positively cash flow after debt service, taxes, insurance and some escrow.
I have found that there are several properties in my area that fit this criteria but it takes much more work to find them. When you do, it is like you said, a near infinite return.

Hope that helps.

wow it is painful to see this thread still growing. You will never hear me say a positive word about this joker. He is a manipulator.