All Forum Posts by: Tom S.

@Raza Rizvi  You should be able to refi the $100k at a standard 30 year term, and have very reasonable payments.  Are you running into any issues with getting a conventional 30 year mortgage for an investment property?

@Robert Malcolm  Just adding to the above posts, I've done a number of seller financed deals as a buyer.  In your situation, the 1st lender has to be on board and approve the transaction.  

Have they already? In general, they should have already asked for POF for their required downpayment. What did you show them at the time for the source of your 25% down?

@Olu Efunwoye I personally wouldn't pay for this, $40k for a coach?  Not sure what they're offering exactly.

If you're managing your own properties already, a few more units isn't too difficult. I have a 5 unit which is commercial, a combination of commercial units (yoga studio, art gallery) and 3 residential units.  It's definitely not more than 8 hours per month to manage this from a high level.  I have a property manager actually do the showings, but any issues like plumber , electrical is a phone call away.

The only challenge is it's a commercial loan, which requires more down, higher rates and shorter terms.  I went to a small local bank for the loan and it really wasn't' much harder than a convention loan. They used a combination of the rental income, my W2 income and my credit to qualify.  

So I wouldn't pay for that "coaching" and use the $40k toward your next deal instead - good luck!

@Account Closed  Exactly as Greg posted above, getting a judgment would prob be the easy part, collecting on it, almost impossible unfortunately.

@Chris Crotty  Congrats on finding a good potential deal!

I have a 5 unit that I bought in a similar situation as yours, with some % done as seller financing.  I reached out to a local bank that knew the property, and asked for the commercial lending department.  They were able to offer a 1st position loan based off the property and income, and the seller was allowed to offer financing, but in a 2nd position.  

So check with your local banks would be a good start IMO.

Good luck!

@John W Pointer Sr Same questions as posted above:  What kind of capital?  Secured RE loan / unsecured personal loan?  

@Theo Seng As Preston posted above, in general a FHA / conventional loan for 3-5% down and a fixed 30 year rate will be one of the best values for a buyer.

I've purchased a number of deals using seller financing.  Regarding your concerns of the going rate over 5% and 5 year terms,  since a standard mortgage is 7% right now, I would expect 7-8% minimum for a seller financed rate.  The 5 year term should mean 30 year amortization with a 5 year balloon.  

Personally I've found seller financing to be best when the property doesn't qualify for a conventional loan because of the condition.  So you can use the seller financing to get in, put in some additional rehab funds to force the appreciation, and then refinance out once the property is stabilized.  Done successfully, you can refi and get your initial capital back out, maybe a bit more, then use those funds to move onto the next deal!

Hope that helps and good luck! 

@Jeff Miller  So the property you inherited is worth $200k and you want to get a $150k loan on it?  Why not just get a cash out mortgage on that new place? 

@Danny Muro  You mentioned it listed with an agent 2 weeks ago - how much is it listed for?  I would assume roughly that's how much it's worth.  That's your starting point.

@Jamie Smith  I've bought a number of seller financing properties over the years.  In addition to the good advice posted above, the two biggest flags I've come across:

1. Don't overpay.  The seller won't require an appraisal like a bank will, so you should order your own.  If you overpay and you're underwater on your loan immediately, it limits your options to sell or refinance should something come up.

2. Be careful the property isn't full or problem tenants, code violations etc.  Make sure the seller isn't just trying to dump their problems onto you.

Good luck!