Owner-Financing Quick Deed Deal...how quickly can I refi

[Marv Nettles]

Hey BP, I am trying to write-up and complete my first owner-financing deal. The owner is in possession of several properties and she would love for me to help her get rid of them. She is basically wanting to liquidate her assets. She's had them on the market for awhile and I was considering trying my first owner-financing deal with a duplex and a single family home that she has. She owns them out-right. I have several questions but first, here's my proposed deal: 

Quick Deed option 

Offer $60,000 for both properties (She has had them on the market for 50K and 40K for over a year)

5% down ($3,125) and $250 per month for 60 months plus 5% interest which would be $262.50 per month.

1. How long do I have to wait before I refinance to pay her off? I see that people wait 60 months, but I would love to refinance in 6 months...thoughts?

2. When do I take over the insurance in my name? 

[Michael Henry]

Originally posted by @Marv Nettles:

Hey BP, I am trying to write-up and complete my first owner-financing deal. The owner is in possession of several properties and she would love for me to help her get rid of them. She is basically wanting to liquidate her assets. She's had them on the market for awhile and I was considering trying my first owner-financing deal with a duplex and a single family home that she has. She owns them out-right. I have several questions but first, here's my proposed deal: 

Quick Deed option 

Offer $60,000 for both properties (She has had them on the market for 50K and 40K for over a year)

5% down ($3,125) and $250 per month for 60 months plus 5% interest which would be $262.50 per month.

1. How long do I have to wait before I refinance to pay her off? I see that people wait 60 months, but I would love to refinance in 6 months...thoughts?

2. When do I take over the insurance in my name? 

 If it was my deal I would propose the following; 

$50k purchase price

Down payment 5k 

interest rate 7% 

Amort.  20 year  

monthly payment $348.00 

Term: 18 month 

Explained: The goal of getting a seller financed deal done is to find a win-win situation. The Seller usually wants to get enough cash to have a peace of mind that you will close the deal in the future. The Buyer usually wants to get cash flow during the duration of the amortization or term of the deal or get control of the deal so they can in the future refinance and hold, or sell for profit. 

Tell the Seller you will give her the price she wants but you need to get your terms. Figure out what she needs the cash for and the amount she needs. Offer that amount as a down payment and base the reminding terms around how much cash you have to bring to the table. 

 Different banks have different rules about refinancing Seller financed property (land contracts and contract for deeds). You need to call around to different banks to find the one that will the best for us and the terms you need. 

Above a gave her the asking price of $50k. The $5k is 10% of the asking price which you can make a good argument about how this is more than the typical down payment.  The interest rate is a little above a commercial loan rate at the moments, I personally like shorter amortization and that is why I picked 20. If the goal is to refinance in six months I'm going to under promise and over deliver.  The monthly payment is what comes out at the end of the calculation. 

 I don't know if you would cash flow based off the numbers above because you didn't provide income numbers. 

Let me know if this helps. 

Mr. Duplex