All Forum Posts by: Patrick Stuckwish

Hello Anna!  Thank you so much for the response!
They are asking for the down payment and then want to collect payments for a minimum of 2 years at the 8.9% interest rate.  After that time, I could do a traditional loan and do a balloon payment to pay off the seller...(can you take out a bank loan for a property that you have a mortgage on thru owner financing?) They are giving different periods of when the balloon payment could be with the stipulations of each period of time.  From what I understand, 8% is about normal for owner financing terms(is it normal for the % to increase for longer periods of time before the balloon payment?)

What I'd like help with is, if the seller is offering owner financing, is it a good idea to take the deal for above market value or should it still be negotiated to get as much equity as possible?  And, are these good terms or should they be different?

Hello Everyone! I'm new to RE investing and I came a cross this deal. 4 bed, 2.5 bath. The property should lease between $1800 - $2000 monthly and the asking price is $174k. Based on comps, it should sell for $161k - $168k.  The market value is listed at $146k.  They have proposed the following...
"Seller only looking for owner financing terms as follows = $24,900 Down
30 year amortization Can refi after 24 months to avoid early payment
penalties of $9500 8.9% for 4 year balloon 9% for 5 year balloon 9.5%
for 10 year balloon ESCROW REQUIRED Closing cost  50/50 Split except agent commission"

Is this a good deal?  At first glance, there is cosmetic work I'd want to do, but nothing crazy, just painting interior and exterior and some yard work.  Its been on the marked over a month.  I'd like to offer $150k so I have some equity to start with.  How can I make the deal better?

Great Tip Theresa!!  Thank you

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Theresa Harris

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@Theresa Harris the utilities are all included in the HOA, I won't see those expenses, is there a way to add the average electric cost for the community to the monthly rent? Or should I leave it off as to be more of a draw to renters?

@Kenneth Garrett great tips on how hat to check for within the HOA

THE $50 - $100 is after 5% maintenance fee, 5% vacancy fee, and $1200 yearly insurance and $1000 yearly CapX.

If I do a SFH I could have a much larger cash flow, as long as there is not HOA. I work just down from this area and it has the equity, I a feel that balances out the low cash flow.... is there anything else I should consider?

@Greg M. Hi Greg! Thank you for your comment. I live in Houston and there is no zoning here. Depending on the part of the city, there can be very big ranges for rent in the same area. If you have any tips for narrowing down for comparable units in areas with no zoning laws I am eager to know them. I’m new to RE and can use all the help I can get!

Thank you

@Kenneth Garrett the HOA is definitely a cash flow killer. Any idea on how to set pricing when the HOA covers all utilities? I'm finding that, for the most part, I can do 1.2% rule and make $50 - $100 per door where there is an HOA.

I know that the cash flow would be very low, but this property’s asking price is $20k under appraised value and I’m sure it can be lowered even further. This would be a deal for equity, not cash flow, but I done want to be paying out of pocket monthly either.

@Dave G. Thank you for your explanation.

I may have not written out the question well.... I would not let the tenant know the HOA fees are in the rental amount, I am trying to figure out pricing for a condo with a HOA where all utilities are covered.

Hello everyone! I know that HOA fees are ultimately due by the property owner, but my question is:

Should the rental amount include HOA fees or should HOA fees be an addition to the rental amount?

My thought process is.... if the average rent in an area is $1000 and HOA fees are $300 should I charge $1300 and be at the high end of the rent curve or should I charge less and have the HOA fees come out of the cash flow in order to keep rent near the middle of the rent curve?

Thank you in advance for your help!

@Bryan Noth great advice!! Thank you