Bought Subject To - Sold Owner Finance

[Luther Wilson III]

Investment Info:

Single-family residence buy & hold investment in Kansas City.

Purchase price: $42,023
Cash invested: $500

A business partner and I purchased this property, subject to the existing financing, for no money down. We did pay some closing costs to get the paperwork done and in order to get the deed into our LLC. From there we sold it, as is, on a contract for deed to a very grateful buyer for $48,000 with $6,000 down and they made payments to us at $600/mth (PITI). The interest rate we charged them was 6.03% and their term was about 10 years. The buyer defaulted after about 18 months and we then sold the property again, as is, to another very grateful buyer on a contract for deed; this time for $52,500 with $5,000 down and they made payments to us at $700/mth (PITI). This time the interest rate was 6.99% and their term is about 8 years. The COC ROI is high and we didn't have to deal with a contractor or a property manager. Creative financing and seller financing is such a great strategy for buying & selling SFH's. :)

[Jay Hinrichs]

Quote from @Luther Wilson III:

Investment Info:

Single-family residence buy & hold investment in Kansas City.

Purchase price: $42,023
Cash invested: $500

A business partner and I purchased this property, subject to the existing financing, for no money down. We did pay some closing costs to get the paperwork done and in order to get the deed into our LLC. From there we sold it, as is, on a contract for deed to a very grateful buyer for $48,000 with $6,000 down and they made payments to us at $600/mth (PITI). The interest rate we charged them was 6.03% and their term was about 10 years. The buyer defaulted after about 18 months and we then sold the property again, as is, to another very grateful buyer on a contract for deed; this time for $52,500 with $5,000 down and they made payments to us at $700/mth (PITI). This time the interest rate was 6.99% and their term is about 8 years. The COC ROI is high and we didn't have to deal with a contractor or a property manager. Creative financing and seller financing is such a great strategy for buying & selling SFH's. :)

state AG's are targeting these wraps then just take the property back as a business model like your doing.  requiring full foreclosure to eject the defaulted buyer. in the meantime you have to pay your payment to the person you bought it from and you have to pay the foreclosure fee's and if they squat and dont move this can end up losing you big money very slowly.. I know you feel like you really hit a winner but be careful with these.. if they go upside down and you cant afford to pay the seller your going to trash their credit and they could come after you as well.

Bottom line you need the cash to pay off the first right away if there is an issue so you protect the seller and their credit.. And then you have to foreclose the buyer .. Now I get it these buyers are usually not sophisticated and you can bluff them out of the house.. but these deals are coming under scrutiny big time.  Especially selling them to what amounts to low income and sub prime borrowers who have the ear of the govmit .