All Forum Posts by: Tom S.

@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!

@Wilson Vanhook  You'd have to finance that $100k in some sort of way if you don't have it.  Either seller financing (if allowed), a private loan (friends / family) or something like that.  Obviously that $100k loan would be a higher rate as it's more risky.

@Bryce Bastian  A few thoughts on this:

- If the owner's desired price is $1.3M and that's the value now, why wouldn't they just sell it outright?  That would also get rid of landlording problems and give them money to invest now, rather than waiting 5 more years.

- Can they wait 5 more years for their money?  

- $300 a month in cash flow when you're responsible for all repairs isn't a lot of cushion.  A few appliance repairs or non-payment of rent will eat that away.

@Cody Cavenaugh Just following up, were you able to get a lender for your potential deal? Seems like there were a lot of DSCR loan choices, and how did it go if you went that route?