All Forum Posts by: Travis H.

By owner financing the property, you eliminate the maintenance and repairs (the buyer now has to take care of that), and the owner should have higher pride of ownership than a renter - since they do own rather than rent. You've also put an exit strategy in place if you are trying to get that equity back out. (Selling a tenant occupied property is otherwise very difficult).

Due on sale clause isn't functionally a problem. The bank just wants their monthly payment on time every month, they don't care where it comes from.

Oh, I see - I guess I didn't read the original post properly.

Either way, the solution I think would be a force placed policy like Jon is talking about.

And definitely look around for a new title company. I'd say it's the investor's responsibility to run a tight ship, but this kind of issue should be something that the title company knows about and insists upon solving prior to closing and transferring title.

Definitely need to look at finding a new title attorney if you are going to continue to conduct owner finance transactions. Our title attorney won't close without the insurance policy in hand.

Edit / Addition:
Are you using a loan servicer and escrowing the taxes and insurance? Is there any insurance policy on the house right now?

We had to pay an attorney to customize a contract that protected all of the parties in the transaction at the same time, so I can't offer it up to the entire internet. :)

[solicitation removed]

We don't sell the financing based on interest rate. We sell based on monthly payment. So in other words, if the house would rent for $1000 per month, then the buyer's monthly payment is $1000 per month PITI.

Negotiate from your side of the table, not theirs. You want to most possible cashflow out of the deal, right? They want the lowest possible interest rate out of the deal. So frame the conversation to be negotiating over the monthly payment and not the interest rate. If they want to talk interest rate, tell them they will get a lower fixed interest rate when they refinance. This way, you get the most possible cashflow, and your buyer is incentivized to refinance quickly.

Downsides of multifamily as of yet to be mentioned - four checks each month to follow up on, four HVAC systems to service, four hot water heaters to keep up, etc.

As with any other form of investment, some diversification would be ideal.

At this point in the game, you could go either way and would have success.

I personally would opt to buy a few single family rentals subject-to. You could pay the wholesaler that brought it to you a small assignment fee, put in new carpet and paint, take care of any other needed repairs, and rent it out. All in all, you'd probably in in for less than 10% cash out of pocket, and have over 10% equity built into the deal, as well as having the mortgage in someone else's name.

Owner financing is a fantastic way to sell a house in today's market, and a tenant that you have had for 7 years is a great candidate!

You don't have to worry so much about foreclosure costs, IMHO. This is actually much better than renting - they will have more pride in ownership of the house than they had previously. Foreclosure is only expensive if you hire an attorney to do it for you. Carpet and paint is all you will need to get it back in good condition - you don't expect your tenant of 7 years and buyer to walk off with your copper or AC condenser, do you? (I'm sure you wouldn't be considering selling them the house if so!)

Instead of focusing on the amortization of the owner financed note, I would focus on the monthly payment. Your tenant is already renting in terms of monthly payment anyways. So reach an agreement on the sales price, down payment, and monthly payment (PITI and use a loan servicer). This way, you maximize your monthly income off of the note, and the buyer is incentivized to refinance to a lower fixed interest rate as quickly as possible.

Give me a shout if you need more help on this. I specialize in owner financing and we've done over 800 transactions in Texas.

I have been thinking about a buy, fix, and hold strategy as of late. I know it can be done, but I'm trying my best to figure how much money it will actually take to execute. The idea is to buy wholesale with a hard money loan that is 65% - 70% LTV (includes acquisition money as well as rehab money), fix it up and get a renter in it, then refinance to a 30 year fixed rate mortgage with a bank.

Factors I know I need to accommodate for:
- HML points up front
- HML interest only payments (monthly)
- Utilities
- Insurance
- Prorated property taxes (for the period before escrow is set up on the 30 year loan)
- Loan origination fees (if these are not rolled into the loan)

I have a near perfect credit score and zero debt, save for the revolving credit on my card, but that is paid in full every two weeks.

My questions:
1) How much LTV could I reasonably refinance out to? Last time I spoke with a mortgage broker in earnest, I could get 80% but that was on a straight MLS purchase, not for a refinance from hard money. Does that make a difference?
2) Is seasoning likely to be an issue? How long will a bank want me to hold the property before the refinance?
3) Am I missing any factors?

It seems like I should be able to get a 75% - 80% LTV refinance, and that would put my net out of pocket expenses to be extremely low when everything is all said and done - perhaps under $10k for a house worth more than $100k.

Thoughts?

Anyone able to walk us through a lease option in Texas? I know that it can be done, I just don't know how.

I have a deal right now that I want to do this with. The seller is about $8000 behind in payments, I would acquire the property subject to the existing mortgage, the new tenant-buyer's option consideration money would bring the loan current (or I'd pay the $1 - 2k difference). At that point, I would be paying the mortgage for the original seller with the rent money collected each month, I'd have ownership with the deed, and I would be waiting for the tenant-buyer to secure a mortgage to purchase the house. When the mortgage is secured and the tenant-buyer closes on the house, I would take home the equity spread between the underlying mortgage and my sale price :)

This setup doesn't violate the SAFE act, does it? There isn't actually any owner financing in this strategy, so I don't think it would matter. The only challenges I can think of are securing my buyer's mortgage (I would have a credit repair company and a mortgage broker involved from the beginning).

Jim,

I have heard of this type of strategy from another wholesaler in Texas, but haven't tried it out yet. What marketing software are you using? I'd like to find something that can take an excel or CSV file and merge in the names and addresses to each individual page, so that ultimately if you have a list of 100 names and addresses, you can just generate a 100 page long document with names and addresses already input into each page, and then print all of them out on 8.5x11 white or yellow ruled notepad paper. This would essentially automate the entire process, all you have to do is input the list, fold up the letters into an envelope, and write the address on the envelope. :mrgreen: