Take 2: Letter to seller for Owner Financing

[Kyle McCorkel]

Figured I'd start a new thread since this letter is long.  Here's the scoop:

Elderly lady, husband passed away, has three properties (duplexes, separate deeds, but two are left/right of a 4-plex, and another is a block away) listed on MLS through an agent. Have been listed about 6 months and they keep dropping the price. They are each listed for around $100K now, so $300K total.

Units are currently all rented.

I went and looked at a few units, and it looks solid.  Definitely some opportunities for rehab (older properties) but for the most part they are in decent shape.  At the right price they would cash flow nicely and then I could invest some time/money into separating utilities to make them even more profitable.

I just closed on a HELOC for up to $31K at 4.34%. I want to offer for owner financing and use the HELOC to fund the down payment (so no money down). At the offer price and terms, I will cash flow around $100/door.

Seller's agent asked me to "write something up" - can you look at the letter, and offer terms below, and let me know what you think? Am I leaving out anything important?

__________________________________________________

Dear Seller,

My name is Kyle McCorkel and I’m a real estate investor. My wife and I live in Hummelstown. I’m interested in your rental properties in _______, and I would like to make an offer to purchase your properties as a package deal with owner financing.

I encourage you to seek council with your attorney and/or tax accountant in order to fully understand how owner financing would affect your specific situation, and if it is right for you. It will also be important that you become comfortable with me as a borrower. I encourage you to perform credit checks on both myself and my wife. You will find that we both score very high, around 800. We are responsible with our finances and take our debts very seriously, and we usually choose to setup automatic payments to ensure we never miss a payment.

I’ve put together my offer price and terms on the following pages, along with an amortization schedule. This offer will be contingent on a physical inspection of each property, as well as verification of all income and expenses.

I look forward to hearing back from you.

Sincerely,

Kyle McCorkel

Offer Price and Terms:

Purchase Price: $225,000

Down Payment (10%): $22,500

Loan Amount: $202,500

Annual Interest Rate (fixed): 4.5%

Amortization Period: 360 months

Number of Payments: 120 (balloon payment after 10 years)

Monthly Payment	$ 1,026.04
Balloon Payment	$ 163,206.86
Total Payments	$ 285,305.62
Total Interest Paid	$ 82,805.62

Amortization Schedule	{42}
Month	Date	Payment	Interest	Principal	Balance
	3/1/2016	-	-	-	$ 202,500.00
1	4/1/2016	1,026.04	759.38	266.66	202,233.34
2	5/1/2016	1,026.04	758.38	267.66	201,965.68
3	6/1/2016	1,026.04	757.37	268.67	201,697.01
4	7/1/2016	1,026.04	756.36	269.68	201,427.33
5	8/1/2016	1,026.04	755.35	270.69	201,156.64
6	9/1/2016	1,026.04	754.34	271.70	200,884.94
7	10/1/2016	1,026.04	753.32	272.72	200,612.22
8	11/1/2016	1,026.04	752.30	273.74	200,338.48
9	12/1/2016	1,026.04	751.27	274.77	200,063.71
10	1/1/2017	1,026.04	750.24	275.80	199,787.91
11	2/1/2017	1,026.04	749.20	276.84	199,511.07
12	3/1/2017	1,026.04	748.17	277.87	199,233.20
13	4/1/2017	1,026.04	747.12	278.92	198,954.28
14	5/1/2017	1,026.04	746.08	279.96	198,674.32
15	6/1/2017	1,026.04	745.03	281.01	198,393.31
16	7/1/2017	1,026.04	743.97	282.07	198,111.24
17	8/1/2017	1,026.04	742.92	283.12	197,828.12
18	9/1/2017	1,026.04	741.86	284.18	197,543.94
19	10/1/2017	1,026.04	740.79	285.25	197,258.69
20	11/1/2017	1,026.04	739.72	286.32	196,972.37
21	12/1/2017	1,026.04	738.65	287.39	196,684.98
22	1/1/2018	1,026.04	737.57	288.47	196,396.51
23	2/1/2018	1,026.04	736.49	289.55	196,106.96
24	3/1/2018	1,026.04	735.40	290.64	195,816.32
25	4/1/2018	1,026.04	734.31	291.73	195,524.59
26	5/1/2018	1,026.04	733.22	292.82	195,231.77
27	6/1/2018	1,026.04	732.12	293.92	194,937.85
28	7/1/2018	1,026.04	731.02	295.02	194,642.83
29	8/1/2018	1,026.04	729.91	296.13	194,346.70
30	9/1/2018	1,026.04	728.80	297.24	194,049.46
31	10/1/2018	1,026.04	727.69	298.35	193,751.11
32	11/1/2018	1,026.04	726.57	299.47	193,451.64
33	12/1/2018	1,026.04	725.44	300.60	193,151.04
34	1/1/2019	1,026.04	724.32	301.72	192,849.32
35	2/1/2019	1,026.04	723.18	302.86	192,546.46
36	3/1/2019	1,026.04	722.05	303.99	192,242.47
37	4/1/2019	1,026.04	720.91	305.13	191,937.34
38	5/1/2019	1,026.04	719.77	306.27	191,631.07
39	6/1/2019	1,026.04	718.62	307.42	191,323.65
40	7/1/2019	1,026.04	717.46	308.58	191,015.07
41	8/1/2019	1,026.04	716.31	309.73	190,705.34
42	9/1/2019	1,026.04	715.15	310.89	190,394.45
43	10/1/2019	1,026.04	713.98	312.06	190,082.39
44	11/1/2019	1,026.04	712.81	313.23	189,769.16
45	12/1/2019	1,026.04	711.63	314.41	189,454.75
46	1/1/2020	1,026.04	710.46	315.58	189,139.17
47	2/1/2020	1,026.04	709.27	316.77	188,822.40
48	3/1/2020	1,026.04	708.08	317.96	188,504.44
49	4/1/2020	1,026.04	706.89	319.15	188,185.29
50	5/1/2020	1,026.04	705.69	320.35	187,864.94
51	6/1/2020	1,026.04	704.49	321.55	187,543.39
52	7/1/2020	1,026.04	703.29	322.75	187,220.64
53	8/1/2020	1,026.04	702.08	323.96	186,896.68
54	9/1/2020	1,026.04	700.86	325.18	186,571.50
55	10/1/2020	1,026.04	699.64	326.40	186,245.10
56	11/1/2020	1,026.04	698.42	327.62	185,917.48
57	12/1/2020	1,026.04	697.19	328.85	185,588.63
58	1/1/2021	1,026.04	695.96	330.08	185,258.55
59	2/1/2021	1,026.04	694.72	331.32	184,927.23
60	3/1/2021	1,026.04	693.48	332.56	184,594.67
61	4/1/2021	1,026.04	692.23	333.81	184,260.86
62	5/1/2021	1,026.04	690.98	335.06	183,925.80
63	6/1/2021	1,026.04	689.72	336.32	183,589.48
64	7/1/2021	1,026.04	688.46	337.58	183,251.90
65	8/1/2021	1,026.04	687.19	338.85	182,913.05
66	9/1/2021	1,026.04	685.92	340.12	182,572.93
67	10/1/2021	1,026.04	684.65	341.39	182,231.54
68	11/1/2021	1,026.04	683.37	342.67	181,888.87
69	12/1/2021	1,026.04	682.08	343.96	181,544.91
70	1/1/2022	1,026.04	680.79	345.25	181,199.66
71	2/1/2022	1,026.04	679.50	346.54	180,853.12
72	3/1/2022	1,026.04	678.20	347.84	180,505.28
73	4/1/2022	1,026.04	676.89	349.15	180,156.13
74	5/1/2022	1,026.04	675.59	350.45	179,805.68
75	6/1/2022	1,026.04	674.27	351.77	179,453.91
76	7/1/2022	1,026.04	672.95	353.09	179,100.82
77	8/1/2022	1,026.04	671.63	354.41	178,746.41
78	9/1/2022	1,026.04	670.30	355.74	178,390.67
79	10/1/2022	1,026.04	668.97	357.07	178,033.60
80	11/1/2022	1,026.04	667.63	358.41	177,675.19
81	12/1/2022	1,026.04	666.28	359.76	177,315.43
82	1/1/2023	1,026.04	664.93	361.11	176,954.32
83	2/1/2023	1,026.04	663.58	362.46	176,591.86
84	3/1/2023	1,026.04	662.22	363.82	176,228.04
85	4/1/2023	1,026.04	660.86	365.18	175,862.86
86	5/1/2023	1,026.04	659.49	366.55	175,496.31
87	6/1/2023	1,026.04	658.11	367.93	175,128.38
88	7/1/2023	1,026.04	656.73	369.31	174,759.07
89	8/1/2023	1,026.04	655.35	370.69	174,388.38
90	9/1/2023	1,026.04	653.96	372.08	174,016.30
91	10/1/2023	1,026.04	652.56	373.48	173,642.82
92	11/1/2023	1,026.04	651.16	374.88	173,267.94
93	12/1/2023	1,026.04	649.75	376.29	172,891.65
94	1/1/2024	1,026.04	648.34	377.70	172,513.95
95	2/1/2024	1,026.04	646.93	379.11	172,134.84
96	3/1/2024	1,026.04	645.51	380.53	171,754.31
97	4/1/2024	1,026.04	644.08	381.96	171,372.35
98	5/1/2024	1,026.04	642.65	383.39	170,988.96
99	6/1/2024	1,026.04	641.21	384.83	170,604.13
100	7/1/2024	1,026.04	639.77	386.27	170,217.86
101	8/1/2024	1,026.04	638.32	387.72	169,830.14
102	9/1/2024	1,026.04	636.86	389.18	169,440.96
103	10/1/2024	1,026.04	635.40	390.64	169,050.32
104	11/1/2024	1,026.04	633.94	392.10	168,658.22
105	12/1/2024	1,026.04	632.47	393.57	168,264.65
106	1/1/2025	1,026.04	630.99	395.05	167,869.60
107	2/1/2025	1,026.04	629.51	396.53	167,473.07
108	3/1/2025	1,026.04	628.02	398.02	167,075.05
109	4/1/2025	1,026.04	626.53	399.51	166,675.54
110	5/1/2025	1,026.04	625.03	401.01	166,274.53
111	6/1/2025	1,026.04	623.53	402.51	165,872.02
112	7/1/2025	1,026.04	622.02	404.02	165,468.00
113	8/1/2025	1,026.04	620.51	405.53	165,062.47
114	9/1/2025	1,026.04	618.98	407.06	164,655.41
115	10/1/2025	1,026.04	617.46	408.58	164,246.83
116	11/1/2025	1,026.04	615.93	410.11	163,836.72
117	12/1/2025	1,026.04	614.39	411.65	163,425.07
118	1/1/2026	1,026.04	612.84	413.20	163,011.87
119	2/1/2026	1,026.04	611.29	414.75	162,597.12
120	3/1/2026	163,206.86	609.74	162,597.12	0.00