All Forum Posts by: Michael Hassell

They say cash is king, and that's partially right..... learn how to delay gratufication, save money, and balance your ledgers.

Knowledge is where the real power comes from get started now. BP's, Dave Ramsey, Clark Howard are all largely available free for the taking.  

My favorite book on real estate is "the millionaire real estate investor" by Gary Keller.

Eschew consumer and student loan debt as if your life depends on it....because your financial life quite literally does.

His price appears to be full retail, that would give me pause....but the cash flow isn't bad.

I believe you will be able to borrow against your cash on hand without a problem...if that is what you were asking. This wouldn't be a mortgage.

The bank will tie up your funds and should offer a competitive rate, this is a low risk deal for them and I don't suspect your credit will be much of a factor.  I've no idea if you can get this at a single bank or if you can borrow the whole amount at one bank (might be limits).  This is just a "secured loan" or "savings secured loan".

There was a lot in your OP and I'm unfamiliar with some of it (don't know anything specific about California, never even been there).  A couple of your other questions are reasonably direct.

Anyone can sell a house for pretty much any amount to someone else.  The lender has no business in making your Dad charge you more for the house.  in fact, they want there to be as much equity left in the property as possible....if they have to foreclose on you later this added equity acts as something of a cushion for them.  They will also happily loan you pretty much all of the difference as a home equity line ... lenders make their money from lending.  The only time you ever really see a lender quibbling over the price is if the value is too low.  In that case your security is deemed unworthy of their cash, dosen't sound like the issue here.

Yes you just ask for the funds you need. $450,000, $350,000 to pay off Dad's loan and $100,000 for Dad...it shouldn't be a problem on a home valued at almost $700,000. In fact it's a rather lovely LTV rate for the lending institution, very secure for them.

For a primary residence I wouldn't monkey around with the value play too much.  it wasn't so long ago that values plummeted and equity got washed away almost overnight (and every successive night for a time).  We all bet on ever increasing value for our real estate, but a market correction could see you upside down in a snap.  I would secure this primary residence on a comfortable 30 year fixed rate mortgage for around $450K, you can always secure an equity line later to pull out any needed cash...and that deal can stand on its own.

Heather, maybe have one of your real estate attorney buddies draw up a lease that allows you to exercise the option whenever you like...point being to lock in the price and keep the terms flexible in your favor.

Figure out how your end game looks.

Get your attorney to draw it up.

Get the lease or purchase option executed with landlord.

Find a buyer.

Close the deal.  

You may well need funds to "buy" the house until your buyer gets it from you.  That is transactional funding....it isn't necessarily required, talk to a competent and experienced attorney.  Most title companies can't handle this on their own but a good dirt lawyer can help you navigate through it...I've managed to buy/sell a property like this  once.

Sub leasing isn't typical but anything can be negotiated....has its own headaches for sure.  I wouldn't do it, but that's a comfort zone sort of issue for me.

So this new property has been a rental and now it's coming to market right? The current owner holds it free and clear but knows it needs lots of work?

I would try to partner with him.  See if he will be your bank for 6 months or a year.  Perhaps you can talk him into  holding the note longer term.  I've even had luck lease optioning property like this while I did renovations then flipped the property.

Private money is attractive here too.  Expand your sphere of influence, build the team to make the deal and set up the next one. I'd make this guy an offer as I've outlined....worste thing he can say is no.

buying or selling?

A lawyer is usually a good idea and could be essential. Really depends on your level of comfort and experience.  Forgive me, but since you had to ask I'm going with "needs lawyer" .  If nothing else pay one to at least review the documents before you sign.

My favorite two reasons to do an owner financed property is 1 no realtor and 2 No bank.  (Actually reverse those).  With that said if there is a realtor involved already I think it's wise and ethical to make them whole and you may have a legal obligation to do so.

Responsibility for physically passing the  taxes can be set forth in the contract but know that ultimately as the buyer is your house that's at risk of anything hits wrong.

I've bought a few homes this way and in always looking for more.  The simplest was simply put together as a law option on a home I fixed up and flipped...most profit I ever made on a single deal.

Leslie,  this thread has kind of blown my mind just a bit.  :)

Im really wondering if this is doable in my area...thanks for sharing your experience!

.....now to go look for a FEMA trailer.

hard money sounds simple enough, but I honestly think you will find it difficult to come by.  

Were I you, I would save save save and look for owner financed properties, lease options, and wholesaling deals. Keep looking for lenders and JV partners, but I would concentrate on techniques that will be likely to happen.

You won't want to hear this, I didn't when I was your age, but you sound quite young and by your own admission you're inexperienced....no crime there and I applaud the initiative you display.....but  I think hard money will be very tough for you.  

All that said, good luck and I wish you much success.