All Forum Posts by: Bob Asad

Does anyone have much success buying SFH with seller financing? (meaning you're the buyer)

Ex. Vacant SFH, absentee owner, 100% equity

You send a direct mail or postcard asking the seller how much they want for their property. Let's say $300k, you then agree to the purchase price but add your own terms (ex. 0% interest, 5% down, 16 years to pay back).

This way, you're paying (example) $1,800/month but renting the property for $2,400/month and pocketing the difference.

Anyone have success doing such a thing?

1. Also, what's the name of this type of contract where it's just between you and the seller? (no banks involved)

2. Anyone have a direct mail or postcard service they recommend for such a scenario?

 Maybe the example is more challenging for a house as the property.

Ex. with vacant land - seller finances to me $20k with 5% down and $1k/mo

Can I after 1-2 months, then resell the land to a cash buyer for $25k, pay off the original $20k and pocket the $5k?

If so, does the original seller finance contract need to say "buyer can resell at any time without prepayment penalties"?

 If I'm not mistaken though a wrap would require the 2nd buyer to also agree to financing terms; which would be the same as me (the 1st buyer). In other words, two financing agreements "wrapped" together.

But the goal here would be for the 2nd buyer to close all-cash (to skip the financing process), would that still work? Meaning they buy the property at once. If this is the case, would the original seller financing have to mention that the buyer (me) can re-sell the property at any time?

Does anyone have experience with reselling a seller financed land or property? (Is this legal?)

For example, let's say you get a 10 acre vacant land for $100k but have it seller financed, so it's $10k down and $1k/mo for x number of years. Can you then advertise the land to resell to another buyer (cash) for $120k and then pay off the original seller, and pocket the $20k?

Same with a house, can you get seller financing on a $500k house and put $50k down, and pay $2k/mo, but then immediately find a buyer (ex. 1-3 months) and sell it for $550k and pocket the $50k?

Are there any rules, laws, or regulations regarding this? What types of contracts would you need?

And would this be considered "capital gains" since it's re-sold under 1-year therefore having to pay a large % of tax on the profit?

Let's say there's 3 properties in a 1-mile radius with 5b/3b, but one is a foreclosure and the other 2 are regular conventional sales.

If you're doing a comp for your subject (4th) property, do you have to take the foreclosure one into consideration?

Ex. Property 1 and 2 sold for $750k, but the foreclosure (3rd) sold for $500k

As you can see, the foreclosure heavily skews the comp.

 Thanks for the information. Regarding #2, do you have an example of what is defined as the "property code"? (are you referring to zoning?)
For #3, I see multiple properties being sold like this, not $30k; but $200k properties being sold at tax deed auctions for $50k-75k

#4 - I don't see how this could be realistic, how would someone have time or money to visit every single property in person especially when participating in multiple auctions across the state?

 So are you spending $100s of dollars per property prior to the tax deed auction for title research?

Anyone done tax deeds in Florida or participated in the auctions?

What are the watch outs or steps that you recommend?

Often times, there's houses or land worth $500k listed with an opening bid of $30k which is a fantastic deal; however, if you were to win the auction, there may be multiple liens and $100s of thousands of hidden fees that you have to pay at once (based on what I read online). So it may end up costing you $400k within 30-60 days without any financing options.

How do people overcome this when you do your due diligence? Do you hire a title company for all the properties you're interested in before the auction? (ex. you like 20 properties, would you pay $150 x 20 properties before the day of the auction?) In other words, you would have already invested thousands prior to the auction just to research the properties and their titles.

What is your recommendation because without doing a proper title search (which sometimes takes weeks and passes the auction date), how would you know if what you're buying is a good investment?

I've been reading more about subject to and here's what I've learned:

-Good for sellers who are off market

-Have low to no equity

-Have a mortgage with a low interest rate (less than 5%)

-Be absentee or out of state (vacant property, or have a tenant)

The buyer would then take over the mortgage payments, and have the seller sign the deed over to the buyer. The mortgage would stay under the seller's name.

The buyer could then rent out the unit, renovate, etc. to increase cash flow or make more money.

But aside from a possible "due on clause" being called by the mortgage company, what's the benefit to the seller?

They are held hostage by the buyer until the buyer fully pays off the mortgage. So the seller cannot go get another loan for a car, house, apartment, etc. so it damages their credit by stretching them too thin.

Am I missing something? In other words, it doesn't make sense for the seller. And equally for the buyer, if you want to renovate and refinance or cash out, wouldn't you have to pay off the entire mortgage at that point and the bank would know it was always the buyer paying off and not the seller?

 I was thinking of combining all tenants security deposits into one Bank of America checking account, is this not the right way to go?