Anyone sell flips with owner finance?

[Michael Plante]

I have 7 properties and they will all be ready at approx the same time

They are all doublewides on 2 - 10 acres.

Prices 150K to 300K

Thinking of selling with owner finance as I just don't want the headaches of renting.

Looking for feedback

[Account Closed]

Originally posted by @Michael Plante:

Originally posted by @Account Closed:

Originally posted by @Michael Plante:

I have 7 properties and they will all be ready at approx the same time

They are all doublewides on 2 - 10 acres.

Prices 150K to 300K

Thinking of selling with owner finance as I just don't want the headaches of renting.

Looking for feedback

 I sell only to Tenant Buyers. It works really well. I have them put down 10%, they have to have consistent gross income that is 3 times the mortgage payment, they take care of all repairs, I don't care what their credit score is, I don't care if they've had a bankruptcy or a foreclosure, must be current on child support if any, must be current on student loans if any. 

Thank you for the info 

What do you mean by tenant buyer please?

Also is this a regular mortgage or rent with option 

I’m having to go through a foreclosure even though the buyer put 30% down

Do they pay the taxes and insurance?

 A Tenant Buyer is someone who lives in the property and is buying it from me. It varies by state based on their laws. In Arizona I can take over a loan (Subject To) and "Sell" on a Lease Option. It isn't actually a sale until they exercise their Option. In Texas I can take over a loan (Subject To) and "Sell" on a Wrap. Texas is restrictive about Lease Options. I believe Florida is okay with Lease Options but you should ask to be certain. 

Here is an example: If I find a house "Off Market", meaning not listed in the MLS. Say, someone who doesn't want to list in the MLS (not enough equity, needs to sell fast, doesn't want to fix the place up, etc) and it is a property worth $200,000. They paid $150,000 a while back and their payment is 4.5% and they put 3.5% down (FHA). Without property tax their payment is about (Principal and Interest $734 & Homeowners' Insurance $40 & Mortgage Insurance $90) so about $864 a month plus whatever property tax is. In Arizona property taxes are low. In Texas property taxes are high. So, add in property tax for location.

Next, they "think" they have $50k in equity. It doesn't work that way. Since they would have to pay an agent 6% ($12,000) and closing costs and have the uncertainty of how long it will take to sell (more mortgage payments & utilities & taxes), and then make any repairs, wait for an inspection and fix those things, not to mention that about 1/3 of the houses on the MLS don't end up selling at all (in my markets). I use that reality to help them come to a reasonable equity amount. I give them a check for the amount we agree to and then take over their financing. This is all done with a Title Report, in Escrow with an attorney.

Then I have a list of "potential buyers" these become my "Tenant Buyers" (people who have wanted to buy but can't get financing) and I email them. I've already captured their info at my website. My requirements are simpler than the bank's requirements. I then look to see what the going rental rates are and add about 10%. That is their payment amount. They will pay a higher cost because they now get to "own a home, their very own.) They can even paint the walls any color they want.

I look to see what the current value of the property is and add about 10%. That becomes their buying price. I get to keep the difference between what I am buying it for (ie: $150K and selling at $200K + 10% - the $25k they put down) as my equity which will get paid when they exercise the Option or refinance. If it is a Lease Option I make it for as long as they like but not less than two years. If it is a Wrap, it is calculated interest based on payment with sales amount with a 30 year term. In either case I put $50k in initially as the investment and do everything I need to do to get the property and I get usually $25k (sometimes less, sometimes more) from the Tenant Buyer at the time of sale (so I recover about half of my investment right away), plus get monthly cash flow plus I get the built in equity by bumping up the price, plus I get principle pay down, plus depreciation and in the case of a Lease Option I get any appreciation and the Tenant Buyer takes care of all repairs and maintenance. Adding: @Mike McCarthy (Sorry, I meant to answer your questions.)