Owner finance deal in NW Oklahoma City by Chisholm Creek

[Ben Scott]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $98,000
Cash invested: $3,000

Owner finance option where I have equitable interest in property. My cash flow is minimal but I purchased at a good price and have instant equity.

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

I'd been interested in this area as a buy and hold. The home next door had been remodeled and the home I purchased was in good condition. This home gave me an equitable interest in a property without a ding on my debt/income ratio.

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

This is an old school company that buys homes at the tax sale, fixes them up and sells them owner finance to high-risk buyers with bad credit. The sale price was fixed but it was a good price for the area and condition.

How did you finance this deal?

This was owner finance. Owner owns the home free and clear. Term is 20 years at 10 percent (yikes). I put $3k down and owner financed the $95k balance

How did you add value to the deal?

I purchased an oven and had the home professionally cleaned. Then I found a tenant.

What was the outcome?

My mortgage is $917/month. I have to pay taxes and insurance. My rent is $995. Do I have cash flow? No. But I believe the home is worth $120k. And I'm accepting I won't make money on this home for several years while I build equity.

Lessons learned? Challenges?

I wanted to find an owner finance deal where I could have a tenant pay my mortgage. I've accepted the reality there is no cash flow. I'm in this particular deal for the appreciation.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. I'm an agent and I represented myself.