All Forum Posts by: Brandon M.

Alex I think it sounds like a decent first deal, and you have to look at it a little different since it will be partially owner occupied. If your mortgage ends up being $950 and you can rent the other side for $750, you end up living for $200/month. As part of your "return", take what you would normally be paying for rent and subtract your new $200 mortgage payment from that, that is essentially your return.

You are buying a property and saving yourself $600-700/month in rent, basically the same as buying a non-owner occupied and clearing $600-700/month after expenses. All the while you are building equity in this property and can take that rent savings and start saving up for another down payment on your next deal.

The mother is a real estate agent but doesn't know anything about short sales? Wow, is that like a GC not knowing how to use a hammer?

 Other than that, have you looked up the official records on the owners? Not sure if every county has the records online now, but you can usually Google (insert the county) official records. This can help you find any of the foreclosure docs that have been filed. You will likely see the lis pendens and when that was filed. If the foreclosure is far enough along you might find a final judgment showing the date the property will be put up for auction (the date the bank can fully take back the property if no one outbids them at the auction). This should give you an idea of what kind of time you have. If the property is being auctioned next week you have a lot less time.

After that I agree with Daniel, have the owner sign a release and reach out to the bank on their behalf. I definitely think you have found something with potential, the best deals these days are deals found like you have, being in the right place at the right time and reaching out to the owner. Once you can figure out the timeframe and the options with the bank, that would help you figure out what your options are. If they owe 2x what the property is worth, you might not have any options but to see if you can buy the property when it is auctioned.

Hope that helps.

Cass I think what you started is the best thing. Check out any properties that are for rent, and you could do a quick search on the property appraiser to see if they are local or out of town owner. Obviously someone in town could still be interested in unloading their property, but you probably have a higher percentage chance if the owner is out of state.

Once you check that out, you could see if you could find what they owe on the property. I don't know how it works in every state but here in FL if you have MLS access you can quickly find the person's mortgage and then do some math to get an idea of what they owe. While you are at it just take a quick glance at some comps and get a general idea what the house is worth.

Armed with those pieces of information call the landlords and see if they have any interest in selling. There are a lot of "accidental" landlords (like myself) who bought in 2005-2007 who now have no choice but to rent out their properties, so you are bound to find someone.

There won't be an easy list you can just buy, you just have to roll up the sleeves, get dirty, and starting dialing!

I will give my two cents. You did mention a few of the most common/easiest ways to find a property, but you could also start trying to track down any of the owners of these commercial properties you are seeing. Similar to the way residential rehabbers/wholesalers will track down the owner of an abandoned house, I would suggest doing this for any properties you see as potential deals.

Take the address and go to your property appraiser website, which will give you the owner's name and mailing address. You could try sending a letter to that address and/or do a Google search for that owner and see if you can track them down.

As for getting back your investment money, I would suggest finding a property that you could possibly sub-divide into 2 or more units, the other(s) that you can lease out to someone else. Similar to buying a duplex, living in one side and renting the other unit out. That tenant usually ends up paying a good portion, if not all, of your mortgage. So a property in an area where someone else would be willing to rent from you would be beneficial. Also, could you find a place big enough to be able to bring on other dentists to rent chairs from you? (Not sure if dentist offices are similar to barber shops where barbers will lease space/a chair from the owner)

Of course if you are looking in areas that are not local it is much harder to get in your car and drive around looking for vacant/abandoned commercial properties.

Too many people are using MLS/LoopNet to find their investments because that is by far the easiest way. You can do it all from the ease of your computer/smart phone. You have to work harder than these people and uncover a diamond in the rough that no one else has come across or pursued yet.

Hope that helps, good luck in your endeavor!

Well of course in that scenario it doesn't matter what the interest rate is, but I get your point. A deal is a deal and the interest rate should not matter if it is still worth it in the end. 

@Joel Owens - They are willing to do owner financing because they still like the idea of getting income as opposed to one lump sum. Also because they have run the facility so poorly (not very strict on collecting rent on time, not keeping good books and records, no written leases on a few tenants) and because they have been showing losses on taxes, they know it is hard for someone to get bank financing if the buyer can't service the entire payment from their own personal income. 

This is why I was asking, because I am not very familiar with owner financing terms. I said it SEEMED high, but I wasn't sure. 

I have previously posted about a self storage facility I have been trying to acquire, and I am now close with the seller on the terms. They are older and want to sell their properties, yet they are more interested in owner financing than just a straight all cash offer. 

The building I am looking to acquire is a 6500 sq ft block construction shingle roof building built in the 1980s, with a total of 42 garage doors (21  10x30 units with doors on either side so they can be subdivided into 2 units). There is no climate control, security gate, etc, it is simply a self storage building. 

Original ask was $150k, I originally offered $100k cash. They declined but indicated a willingness to take $120-130k, so I countered with 50k down, 120k total, 5%, $1000/month payment for 3 years with a balloon payment at the end. The seller countered my offer with 125k, 50k down, 3 year balloon amortized over 8 years, at 7.5%. Either way I still have the ability to acquire a self storage building for less than $20/sq ft, which is cheap!

Will definitely include no prepayment penalty as part of the agreement so I can pay off at any time with a bank loan if I want.

Part of the appeal of the owner financing is that the property shows ugly on paper, the owners have been showing as little rents as possible (not reporting cash) and showing phantom expenses. As such i would have a hard time getting a bank loan on it now because my DSCR wouldn't be high enough to cover this debt.

My question is, what do you think of these owner financing terms? The 7.5% seems high, but if I can purchase and show profit for 12 months I am hoping I could find a bank willing to loan me money cheaper. Either way the goal is to pay off completely in 3 years so I can own debt free. 

@Cass R. Smith - For one I would say congrats on the 100% success rate, sending one letter and getting a response that day? Man, I think most people sending out letters would love just a 8-10% response rate.

One of the best ways to get a deal is to get the seller to like YOU. Most successful investors talk about how they barely talk about the deal and the offer and instead get the seller to discuss information and get them to like you. The deal obviously still needs to make sense from a numbers perspective, so just be personable and honest and prepared, with all of the comps and how you came up with the rehab numbers, etc.

Just don't come across like a money hungry shark, too many people lose deals because they feel more like a used car salesman than someone who is interested in helping.

Being that he is an older investor treat him like you would your own grandfather and if he likes you, it would certainly help your chances of getting an opportunity to purchase his other properties.

Wow, is the $525 for a 2000 sq ft, even in a rural area, in line with the current market rents? Even if a town of 500 people that still seems very cheap for such a large house. Even if you buy the property and have to assume the existing lease (likely for 10 more months) is there any opportunity to increase the rent once the lease expires?

I did a quick Zillow search and see a lot of houses for sale for pretty cheap, and it looks like the average income of the city is below $30k.

I still say that return is a decent deal for some cash flow.