Rent or Seller Fin

[Cody Bailey]

have 2nd home under contract trying to figure out which direction to go. I fixed and am renting my first deal. I went conventional with 25% down, plus paid the rehab out of pocket. Very nice returns, but took $28k cash (10 deposit + 18 rehab/utilities/carry). Cashflows $547/mo after note and ins and taxes. Wish they would all cashflow like this, but i realize this was a great deal.

I want to seller finance this 2nd one (like the thought of no ins, no tax, no maint) to preserve cash .... Advice appreciated.

2 bed 1 bath 800 sq feet + detached 2 car + 9x13 finished building that previous owners used a bedroom (has closet, window, cable, elec) Under Contract for $30,000

Appraisal Dist Value $46,60 Market Value with $15,000 Rehab $65 -70K

Rent would be $750/mo with the $15k rehab

Bank Note on purchase $193/mo (5.25 @ 15yr amort, with 20% down)

Tax $100/mo, Ins $73 / mo

Total Exp Mo = $366

Cashflow = $384/mo or $4,608 yr (over 20% / yr)

I am out rehab $$ until i refi cash out which would then reduce my cashflow to about $250 / mo.

If I seller finance I $650 / month at 9% on 15 yr term I would make $457 / mo

Carry that out 15 years and I like that.....My risk is the bank calling the note, or having to foreclose if they don't pay. With a $6,000 down payment the foreclosing doesn't bother me. If the bank calls the note, i just pay them off.

How many of you started off buy and hold and transitioned to seller financing deals? Seems like you get the cashflow + interest and don't have the maint issues to worry with.