Owner Financed Deal

[Corey Waldrep]

Hello all,

I am working on an owner financed deal, and would love feedback on the matter.

4 duplexes that are 3 bedroom 2 bath with all stainless steel appliances built in 2012, no washer or dryer.

6 units at 650 mo

2 units at 600 mo

All are individually metered - tenate pays all utilities

Taxes: 9900 annual

Insurance: NA

Down payment: 30k

Purchase price: 495,000 ( Negotiable)

He wants a 15yr amortization schedule with a 5 yr balloon.

Waiting to discuss the interest rate.

I am looking to owner occupy one unit, and adhere to all Safe Act rules through an Attorney. I am looking to see what a good purchase price would be and a good interest rate would be to really make it work.

Also, since it is owner financed when the 5 yr balloon is up how easy will it be to get financing through a bank?

[Andrew Fidler]

Corey- check out the buy and hold calculator...

http://www.biggerpockets.com/buy-and-hold-calculator/new

You get ONE free report as a non-paying member, so use it like an 8 unit...run the loan terms and all the individual costs identified. You want to know what the ACTUAL cash is after everything is factored...because this will tell you whether you have the cash to actually pay EXTRA and own this thing free and clear. (If not I say bank financing with fixed rate is your best option since you're hosed if the 5 yr expires and he refuses a refi and you can't get another loan somewhere else) (What's the tax value? Just curious, I know it means nothing)

Personally- I would check the area on the MLS and make sure you aren't over paying...seller fi is normally the default when the owner is trying to pump out a sub-par building.

ALSO- I invest in a Toledo 1950's construction neighborhood with white fridge and gas stove from local resale shop for $125 each....my 3/1 houses rent for $700 so you may either have crazy low rent for a 3/2 apartment or you have a "renter's" mecca where they get the best for damned near free. I can get sell you a turnkey $6500 profit/yr house rented section 8 for $30k...and you don't have to live there.

Also check the marketplace, I just threw up a Toledo 6 unit- $17000 profit a year for $145k...not pushing my buildings so much as saying- look around and see what there is before you lock yourself into that much loan. Personally I started in 2009 and ammassed my portfolio from those who went bankrupt...so I never take on so much loan my day job can't cover it should the world go nuts again.(Think also..."If I had $500k would I buy THIS??? Fact of the matter is you WILL have $500k after 5 yrs of investing with a dayjob and a good bank relationship...so beware of blowing you load on one massive, high value, high interest, 5 yr balloon purchase...I buy where it makes "cents", not where I can show off the building)
Just because this guy will sell to you doesn't mean that it's a good deal...still the cash flow looks pretty basic on the first glance.

If you are putting down $30k that should answer the bank question pretty well...it's all individual...I buy my houses in Toledo on a line of credit (so I can buy 15 foreclosed $20k houses and there aren't any appraisals or bank discussions required...I could buy a boat or cruise with the money if I was stupid enough to choose to do that). Meet with a few banks in the area and see what they think of you. Small banks will get you in front of an executive whom can actually THINK vs plug your info into a calculator...those are the banks you partner with.

Sorry for the soap box, got a bit long winded!

Andrew