All Forum Posts by: Tom S.

@Jovonte West Make sure you continue to focus on your credit, It's fairly easy to raise your score to approval level by making one time payments. As others mentioned, try to house hack using an FHA loan, which is only 3.5% down.

Good luck!

@Travis Felchlia Welcome to BP!  I'll lay out an real life example of one of the first seller finance deals I did.  $80k purchase price, 10% down, so the seller financed the rest: $72k, 6%, 30 year amortization (payments = $432 per month).  You're correct that most sellers won't wait the full 30 years for their money, most will insist on a balloon payment in 5-7 years.  So you make your payments for 5 years, and then the balance is due, typically you'll sell or refinance at that point.

In my case I put about $40k of rehab into it over 6 months.  I then went to a bank who appraised it at $170k.  They would lend 80% of that, or $136k.   I'm all in at $72k + 40k rehab = $112k.  So I'll net $24k after the refinance (less closing costs).  That reimburses my original $8k and then some, and I can use that for the next place.  And I still have 20% equity in the rehabbed property.

So it takes work but can be done.  Good luck!

@Van Tran  I wouldn't.  As expected, the lower the score the more likely they won't pay you, which I've seen time and time again over the years.  Depending on your state, you can search online and see eviction / judgment history.  The biggest problem is that if you have to evict, your changes are slim to none you'll ever collect anything.  At least most people with a higher score have something worth protecting, so don't want to get a judgment against them

My minimum score accepted is 660.

@Jim L. I've used local bank and commercial lending where they provide purchase + rehab financing. ARV done in advance and the bank will lend against that total value (75%). Converted to a normal mortgage once the rehab was done so no need to refinance again, and no double sets of closing costs.

Much like Matthew posted above.

@Anthony Myatt  11-12% is an average, depends on the person, and usually just shorter term only.  But since even now with mortgage rates at 6% for a 30 year fixed, there's no reason to borrow at double that rate, IMO.

@John S Thomson I mainly do the BBBR method: buying fixers, rehabbing, keeping them as rentals, and then refinancing and pulling out cash for more investments.  I primarily work in the Washington county area these days, the greater Montpelier area which seems to have a good job market and very low vacancy rates.

@Noyessie Hubert  Personally I would hold off and save a bit more.  There's definitely slight downward pressure on home prices now, not much, but even at 5% down over the next year will put you way upside down with a 0% downpayment + closing costs on a $500k home.

Obviously no one knows the market for sure, but lots of uncertainly at the moment over the future price direction.  No rush to jump in.

@Zachary Bliss  I'm surprised the seller would allow it to be assigned to someone else, not knowing the credit of the buyer that will be making the payments for xx years.

I've done a number of seller financed deals as a buyer, and in general they still want to look at my credit.  Similar to applying to rent an apartment, of course they pull credit.  So purchasing a house they would too. 

@Eldon Mitchell  Unfortunately for about the next 6 months, the lender will use the lower of the purchase price or appraisal price.  When the property closes, that closing price sets the new comp or valuation, since that's the price it actually traded at.  In 6-12 months (depending on the lender), you can pay for another appraisal and they may lend off of that.

@John S Thomson  If you're looking to buy in SC but live in VT, I would go with a national mortgage broker.  One credit pull and they can shop around rates.  Many of the local banks in VT only lend in VT or New England.  Some of the smallest only loan in certain counties in VT.  That said, I found for lending in VT the local banks were fairly easy to work with.  Many times the loan officer knew the property in question.

Good luck!