Selling Homes to Investors on Terms

[Patrick Sears]

Hello,

I was wondering what y'all thought about paying all cash for low-end fixers, NOT fixing them up, and then offering to sell them on terms to local investors looking to fix and flip or fix and rent?  Trying to get away from the rental/landlord thing...

Some thoughts:

• Example: Buy a house for 20k-40k; sell to investor for $5000 down, 12% int, 240 month amort with 3-5 year balloon?  These types of homes around here will rent for $800-$1100 all day long depending upon # of bedrooms
• Season for 6-12 months then sell either the whole note or a front-end partial to a note buyer
  • What would the discounts be for either scenario? Recourse vs. Non-recourse?  Would there be a strong market for these notes?
  • If I sold a front-end partial, would the note buyer get put on the title as a 1st position lien holder?
  • Would it make things easier if I tried to structure this as a land contract/contract for deed to my investor/buyer?
• Sell to investors with LLC's only to avoid Dodd-Frank issues
  • Or get my mortgage origination licensing and sell to everyone? 
  • Can I make decent money originating loans for other investors?

I've read a couple of ebooks on the subject; they are ok but not exactly college-level reading, at least not from a finance perspective.

Would it be realistic to turn this into a full-time business and build a 100+ note portfolio of these things?

Thanks!

[Patrick Sears]

Thanks everyone for all of the great replies.  

I have briefly looked into the requirements to become an RMLO in Virginia.  Wondering if it might be worth it if I were to really get into this and start selling to everyone, not just investors.  I have tried Googling "RMLO Richmond Virginia" to see if I could use one here, but nothing really comes up.  Any ideas on how much they charge?

Jeff, on the house you just bought specifically to sell to an investor; did you fix it up first or just sell as-is?  What were the terms and how much down did you require?

Thanks!