1st owner financing deal!

[Devan Mcclish]

I have been making a lot of owner financed offers recently. I really see the value in using owner financing when I can as long as the numbers still work. I finally got one accepted and closed! Below are the brief details, enjoy!

How I found it - driving for dollars in a sub market of nashville that I like. I have actually seen this house multiple times. I have been sending them letters for about the past year on a monthly basis. Well, the interesting thing here is the properties changed hands to another individual because the seller was in default. He deeded the property to an individual who lived about 2 hours away from property. It was tough to evaluate the deal since he had never even set foot on the property!!! I know crazy right?? but I asked him to meet me at the property

Numbers - After walking through the property I instantly knew it was a good deal. The property was a little run down and needed some work with a seller who had ZERO earned equity. I estimated about 10,000 in repairs. I own 4 units right around the corner so I know what renter expectations are in the area. So I offered him the following:

1. 35,000 cash

2. 50,000 (500 a month for 100 months)

He immediately took the owner financed option. I got this deal with zero down and zero interest. In roughly 8 years, I will have a property that is paid for, and every payment I make to him is a payment back to myself in terms of equity. I have 10,000 plus closing costs in the deal, and it is renting for 1,000 a month. This deal makes a lot of sense for me since my goal is not to obtain piles of cash, it is to acquire passive income properties that will be paid for by the time I am 40 (I have until I am 32 to obtain as many of these as I can: I am 23 now). 

Sometimes, terms are just as important as the purchase price. I am okay with paying a little more to get zero down and zero interest over the course of 8 years. 

Using a 40% expense ratio that allows for $400, that is $100 cash flow after the principal payment is paid. 

Lessons - always submit an owner financed offer. I am not entirely bankable right now since I have a lot of debt tagged to me for new construction. If you submit two offers, cash and owner financed, it becomes an either or vs a yes or no to the seller. Anytime I can get my hands on zero interest owner financing, I am going to do it, even if I break even on it, because in 8 years I will have a free and clear house that is cash flowing a 1000 a month.