All Forum Posts by: Ryan R.

How do banks recognize owner finance?

Here is what I want to do.

Owner Finance with zero down.
Rehab the property and put tenants in place. 2-3 months
Refi the property through a conventional 30 year loan.

Will a bank recognize owner finance and treat the property as if it is mine? The goal would be to refi without the 20% down since my LTV would be less than 80%.

What is your estimate for repairs? How much?
What interest rate on the loan?
How much profit are you looking at?
What is your level of confidence in rehabbing within your budget?
What's your targeted sales price after rehab? How does this compete with the comps in that area?
Have you taken into account realtor fees/closing costs?

If you go over your rehab budget, it takes longer to rehab than you estimate, you start to accrue interest on your lowes card and the property is not worth as much as you thought, how much money are you going to make?

Do a worst case scenario formula and see if you still can make a profit.

Great job. Sounds like you didn't have any problem with the financing. I know a lot of people complain about finding financing for such loans.

I like the point about the 15 year note with the lower rate. I bet this deal pays off for you big in 5-10 years.

Hendrix P., would you be willing to share any details about your deal? What percent did you put down? 30 year note? Conventional financing?

Roselynn,

I admire your goal, but I think you should clarify it. This goal that you've set forth sounds more like a 10 year goal, not a 1 year goal especially for your very first year.

I am what you would consider a newbie in this business and I only own 1 investment property that I've had for 4 years. I am just now getting comfortable and knowledgeable enough to try and expand.

Make it a goal to acquire 1 property this year and then make an assessment of your returns, time and capital you've got invested into it. Then you will have a real understanding if this a valuable business for you.

Gary Clisele,

A fellow BP member has a good website with rehabbing cost spelled out, both labor and materials. You can see from his numbers that material and labor costs are in no way related. It all depends on the work being performed.

That's true Bienes.

The reason I recommend a property management company is because they will know exactly what the norm is for your area. You may be surprised what responsibilities the tenants are held to and also what they aren't held to.

This will also ensure that your lease is competitive with other properties in your area. It's also good to have a relationship with local managers in the event you are hard up for a tenant.

My best tenant was sent to me by a local property manager that I know. I simply pay a finders fee.

I would get some local assistance from a property management company to help you draft up the lease. They should only charge a small fee for this.

They can spell out that the tenants must be responsible for certain repairs so that they aren't calling you all the time for things like light bulbs and air filters.

How did the inspection turn out? Anything major?

Hendrix P., how old is the property? Obviously the current tenants are comfortable there, which would indicate to me that they don't have too many problems.

It also depends on the tenant. I've had tenants that never call and ones that call once a month. In my experience, the ones who never call don't take care of the property compared to the ones who call often.

I'd give it a couple months and feel out the tenants. Make a decision once you know what to expect from them.

That's right Brian Hoyt.