All Forum Posts by: Brad Dickinson

I recently just sold my first deal using a wrap around mortgage. I owner financed the new note for 15 years. I am currently 2nd position lien holder but have a low pay off in comparison to the note. I have never sold a note or know much about them. Any info would be greatly appreciated! Here are the numbers below:

1st Lien

Purchase price: $60,000

Owed: $48,000

My interest rate: 0%

Monthly payment: $500

Years left: 8

2nd Lien (my note)

Financed amount: $185,000

Interest rate: 6.39%

Term: 15 years

Monthly payment: $1600

Time left: 14 years 10 months

Total P&I once matured: $288,000

@Theresa Harris thank you so much Theresa for the help!

@Darius Ogloza Thank you!!

@Nate Monson Thank you so much Nate! The dilemma I have with selling is that it’s an area with high oil and gas work. All of the workers down here are staying in places just like what I would rehab this into for $45 a night on short term stays. One lodge down here has been mostly 100% occupied for two years. Although, due to the properties condition I could see how it could be better off to lessen the risk and walk away with “guaranteed” pay. Thanks again for the advice!

@Anthony Dooley

Thank you so much for the advice! Have a couple different offers now on the property.

@Doug Shapiro Doug, thank you so much for taking the time to offer some advice! I do plan to do a 1031 exchange and have spoke with two potential buyers. Thanks again!

Thank you to anyone willing to offer some advice! I recently purchased a small multi family property with two other partners. It was honestly a deal I should have done on my own but was in my first year a becoming a realtor so paychecks were few and far between. The property was purchased for $60,000 on a 0% interest, 0 down owner carried note over 10 years. It was “appraised” at $104,000 and likely valued at $120,000. Our plans were to originally fix all ten units up due to being able to get approx $500 a month for each unit after about a $250,000 renovation. This year the property appreciated 50%. We only have about $8000 in the property at the moment and I just recently had a discussion with a company interested in purchasing it. The deal we have discussed is to sell the property for $220,000 -$20,000 down, doing an owner carried note at 12%, amortized over 20 years with a 3 year balloon. If we take this deal it works out to us collecting approx $290,000 for a property we picked up for $60,000 and have $8000 of our cash into. My gut tells me to make the deal and let the new buyer take on renovation risk, and roll my approx $130,000 share of profits into another, larger project on my own and not in a partnership. So my question to those who are in the buy and hold for long term is what do you see as the smarter play? Holding and renovating, or taking the cash and reinvesting? Also, being that we only have had the property for 7 months, can I expect still get hit with short term gains on the entire sale of the property being that it’s owner financed? Thanks again!

@Javier D. Thanks! I will just have to starting going by the banks one by one lol

@Victor S. It has actually been quite difficult to find an exact cap rate due to the town being very small. If I were renting these units out on annual leases I could probably expect $500 a month rent. Due to the demand for short term housing in the oil field I can rent them all bills paid for roughly 900 month. I have a friend in town and his 16 units which are only 50 sq ft larger than mine are renting for $1200-1500 a month. Some are even on contracts through companies who lease at the higher rate. He has had few vacancies for 2 years with a current wait list to get into his. (He and I have discussed me “purchasing” his waiting list at 10% rents to begin filling my units). His 16 units he said I believe appraised around $1.2M. The cap rate I have really only been able to find for the area is about 10%.

@Dorian Wood Thanks Dorian! That’s the plan for today, to just begin calling and networking with all of the different lenders I can find.