Owner financed Rental and securing a LOW interest rate

[Hoa Nguyen]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $121,000
Cash invested: $5,000

Bought my first turnkey rental property using the owner financing method. The seller had already paid off the home, renovated it, and it was ready to move in/rent.

What made you interested in investing in this type of deal?

Reading 0-75 Units in Year by The Kwak Brothers, and understanding what they call the FORCE method of investing.

How did you find this deal and how did you negotiate it?

Found on Facebook Marketplace. After running comps in the area, I found that it was very undervalued. The comps ran about 125-130k. Keeping that in mind, I offered $121k with $5k down and all I asked was an owner financing balloon of 7 years at a 3% interest rate amortized over 30 years. The higher bid price is what made the seller consider owner financing over a traditional sale. With interest rates continuing to rise around the 6% and above range, the real prize of this deal was being able to

How did you finance this deal?

Owner Financing

How did you add value to the deal?

After noticing it was undervalued, I offered a little bit more in exchange for the financing terms I desired. Still making sure I was getting a deal on the purchase price ;) The home is located near the local college and shopping centers and will have no issue renting and continuing to bring in cashflow. 

What was the outcome?

Got an already updated rental with little money down and a lower than market interest rate

Lessons learned? Challenges?

- Negotiate your terms
- When seeking owner financing, owner is more willing if the home is paid off and isn't residing in it
- Find title companies willing to draft up a mortgage note for owner financing now, instead of searching while negotiating a deal