All Forum Posts by: Will R.

https://www.brookings.edu/interactives/map-property-taxes-in-your-county/ 

Just divide it into two condos. Then you only have one accessory in each. 

Once you build new it will make even more sense to sell. The new construction values are higher. Thus, the taxes will also be higher. Double incentive to sell. 

https://www.maxleaman.com/

Max is with Prime Lending. Amy (mentioned by Veronica above) is on his team also. I have worked with both. Great team. 

@Chris Soignier

I like your strategy (mainly the 10% interest) but I think I am still missing a few pieces. Are you coming in just as a lender? Are you creating the deal or is someone bringing it to you? What part of the state do you farm these deals in? Are you wrapping a mortgage or is this an un-leveraged loan? What is a normal spread for you between the purchase and sales price? 

Thanks for letting me pick your brain!

@Chris Soignier

All really good points. Glad you provided some counterbalance. 

1. Totally agree. Higher interest rates make a big difference. Thus my comment about 10% rates at the end of my post. 

2. I would guess that you forced the appreciation in some other way through the purchase or rehab. That works the same if you hold or sell without owner finance. If you are getting more than the actual value, it is maybe related to the risk of the note, not the property. 

3. Only if reinvested as i mentioned, but the forced savings in landlording creates a good balance for me between risk and security.  

5. That is fair, I do not know much about servicing. Just seems complicated from my side. 

7. Maybe this is an impractical concern of mine but it seems like tenants who do not qualify for traditional financing would be more likely to neglect insurance. I guess the servicer can buy it but that seems tricky. 

I see lots of down sides to seller financing. (or upsides to landlording if you are glass half full)

1. Lack of liquidity - Harder to sell a 6% note than a house
2. Lack of appreciation - While not guaranteed, over the long haul, appreciation is huge
3. Shrinking equity - Rather than growing equity as a landlord, you are losing equity (though you could reinvest if you are disciplined)
4. Taxes - You are avoiding property taxes (which are admittedly terrible) but you have acquired income taxes
5. Servicing - Servicing is not totally free or totally simple
6. Foreclosure - Lot harder than eviction
7. Insurance - Rather than just getting it, you have to make sure someone else has it
8. No Exchange - 1031 does not work with seller financing
9. No Development - Sometimes development rights or demographics change and it would be great to add another unit or square footage. 
10. Surprise sale - You are not in control of when this asset disappears because the new owner can sell whenever they want

 Not trying to say it does not have it's place. I think it can be a good exit strategy but maybe not as good for generational wealth. I will be taking a small second lien soon but that is primarily to grease a sale I want to push through. Also, I think my opinion of seller financing will change significantly if we ever get back to 10%+ interest rates. 

Need more info. Can you provide the address? Is it in Austin? What is the exact zoning? 

I have had it removed a couple months after purchase but it requires enough rehab work to force appreciation and it requires paying for the reappraisal. Seems unlikely in this scenario. 

It might seem crazy but you have to buy with cash and rehab in Austin to get a 1% deal. It is not an easy place to cash flow. Austin is a bit more like gambling right now. If you pick a winner, you can make a killing in appreciation.