All Forum Posts by: Roger Pokorny

I checked and there is no limit in Indiana.  I was thinking around one months rent, but wanted some input from those that have experience.

I am getting ready to rent a 3BD, 1.5BA house for $950/month and am working on the security deposit amount.

I am thinking about $1,000 but that seems high.  What and how do some of you decide what to charge?

@George Flevotomos,

Your comments are about what I expected.  I had a hard time believing that a lender would agree to this deal.  I was hoping that my excellent credit rating and cash in the bank might help.  I also believe there is a possibility that the appraisal could be higher than the purchase price.  At least the assessed value is about $30,000 higher than what I am willing to pay for the property.  I will have to see if the seller is willing to negotiate.

Thanks for the feedback.

@Bill Gulley, @Brian Gibbons

Thanks for the comments. I need to find out what is motivating the seller. I believe all the rental property was inherited from their father. I am trying to contact them to see how interested they are in negotiating. I am very early in this process. I don't believe a TIC agreement will work in the situation because this is not a flip. My intention would be to buy and hold as I believe there is potential for appreciation, but not in the next year or two.

The seller does have all of his other rentals up for sale, but they are high end rentals and too expensive for me to consider.

At this point I am thinking the best option might be to see if the seller is interested in 90% financing for 1-2 years.  I could re-finance at that time.  The best option would be a seller carryback loan for the down payment, if I can find a lending institution to accept this arrangement.

Will lenders allow a seller carryback loan to cover the down payment?  I have the funds to cover the down payment, but want to keep them available for other investing.

@Cameron Tope, a JV is something I didn't think about.

@Bill Gulley, I didn't know such a thing existed. I will have to talk to my CPA and lender for more details. This may be an option as I believe the seller is not in need of all the cash. I also know they have several other properties. 

@Steve Vaughan, I like your COCR, but those are a little higher than I can get in my market. I am seeing COCR around 12%, which is my goal. Thanks for the comment.

@Mark Spidell, I considered complete seller financing. That may still be an option to consider. I will have to see what the seller is wanting out of the deal. 

@Dan Marriggi,

Thanks for your comment. I am not sure what your thought is on refinancing. The lenders I have spoken to will lend up to 80% LTV. When refinanced the LTV drops to 70%. Even if I refinanced 6 months later, I couldn't make up the drop in LTV.

I have a potential lead on a duplex and would like to use some creative financing to do the deal.  

I have approximately $25,000 to invest.  My strategy is to invest in fix & flip properties, where I can use the same $25,000 over and over again.  As I build equity, my plans are to invest the excess equity in buy and hold properties.  I have a lead on a duplex in a market where I think there is potential for future appreciation.  I don't want to pass this opportunity up, if I can negotiate a good price on the duplex.  

I have a good credit rating and have no issues getting bank financing.  I could use the $25,000 as a down payment.  If I do that, I would not have the funds left to invest in the fix & flip part of my business.  I would have to wait about 3-5 years, re-investing the cashflow from this duplex back into the business before I could look for the next deal.   This does not achieve my goal of $20,000 income in the first year.

There is a potential for seller financing.  One thought I had was to negotiate a carryback loan with the seller.  My thinking is to negotiate a $20,000 carryback loan with funds dispersed at closing.  The seller would have to agree to a second position on the deed.  The loan would have a 30 yr amortization, with a 5 or 10 year balloon.  I would use the funds to cover the downpayment.  This will allow me to continue investing in the fix & flip part of my business and not pass on this opportunity.  

Will financial institutions allow a carryback loan such as this to cover the downpayment?  Since I have the funds in the bank, I am not sure if this will make a difference.  If the financial institutions will not allow the carryback loan, are there other ways I can structure the deal and still make this happen?  Can I use the funds in my bank account for the downpayment and do a second close a few days later?

Line of credit on my house is out of the question. 

I'm looking for ideas from those of you who have successfully used creative financing to close on deal.

The banks I have talked to will lend up to 90% with a HELOC. In your situation, you would be able to get a HELOC for $16,000 ($190,000 X 90% - $155,000).

Gone are the days that banks will lend up to 125% of the appraised value.  Many of them suffered from extending their credit too far in hopes of houses appreciating.

@Evan Burke welcome to BP. There is a lot of information here.  I am currently investing just south of Bloomington, in Bedford and have plans to eventually move into the Bloomington market. Let me know if I can help in any way. 

Good luck!