All Forum Posts by: Brandon R

Hello Everyone,
I have 6 investment properties after 16 months. 2 of which are rented. 3 are on Land contract. The last one is just finished and available for whatever..
I have been considering doing all my properties on land contract to qualified buyers. Those people that are very close to being able to get financing but can't. I run credit, background checks, refernce checks, etc.. and I send them to people who can help them improve credit.
I ask for 10% down and charge about 9-10% interest (I pay 7%). I make about $180-$200 profit off of each contract sale monthly. Their payments includes principle, interest and property taxes which I hold in savings until due. They are responsible for their own insurance in which my bank and I are listed as additional insured.
I really like this concept because 1. Down payment 2. eliminates maintanence calls 3. Puts ownership responsibilities on the contract buyer. 4. Better quality "tenants"
I understand that a high number of these buyers walk away from the deal. I think that is ok! So do renters but renters don't put 10% down payments and eliminate our management and maintenance headaches. If they start to get behind the first thing I will do to save months of disputing is go to them and offer a deal. Just leave within 30 days and no lawyers will be involved, no foreclosures, etc... if not then I call my attorney.. Then I clean it up, get another 10% down and do it again.
This seems better than renting. Safer and more profitable.

What your opinions on this strategy? Does anybody else do this? I am not against owning straight rental homes. I am just trying to be smart about it and increase my cash flow while limiting my time, maintanence, etc...

Property taxes are 133.00 per month.

My fixed interest rate when I convert from a construction loan is 7% amortized over 20 yrs.

I have posted about this deal before but I am still unsure. I bought a foreclosure for 28,000. Put 11,500 into it and now its appraised at 70,000. Of this money 5,600 was out of my own pocket for the down payment. The remodeling was done out of a construction loan with interest only payments for now. So with that said when not considering my down payment I owe the bank 32,400.
I am just getting into a contract sale with a very good prospect. With this I will get a 10% down payment. Sell for 67,900 with 6,790 down. I have it set up were he will pay me 650 per month which included p/i/t. The taxes I will hold until due but he will be responsible for insurance naming me and the bank as additionals and providing proof.
I have a two part question here.
1. Do I use a straight contract with baloon or a lease option? What would benifit me best? I am not sure how a lease option works or how you right it up.
2. I will refi to a conventional loan as soon as possible. Since I have much equity should I take my profit now by cashing out? Or wait until the baloon is due and use a 1031? I typically want to at least get my down payment back plus have the buyers down payment so I can buy another property. ????

Please help... I have many questions.

Is this a good rental buy???

Purchase price: $20,000 / Market Value $25,000

Yearly Taxes: $34.00 Monthly
P/I: $155.00 (7% at 20yr amortization)
Insurance: $20.00 Monthly
???????: ????

Rent $450.00

Thank you for any help....

Brandon

Thank you so much Jon!!! I really needed to hear that.

Brandon

I have a house that I just finished last month that I am advertising for sale with a contract possible with 10% down. I still have just the construction loan paying interest only (7%). I have a total of 40,000 (28,000 purchase price including 20%down and 12k in improvements)in this property and the repaired value is $70,000. I dont want to make a big mistake on this one. That is why I am seeking advice. I want to be smart about this.

Should I rent, sell outright, land contract?

Should I Refi it? At what LTV? 60,70,80%? Or should I just refi to get my downpyment back?

The initial plan was to refi at 80%, get down pymt back and pay off my wifes car loan (9,000). I think p/i/t/i would be around 550.00 per month after this refi. I obviously not been factoring in, what did you say, 40% for unexpected expenses. If I rented or even sold this on contract my pymt from them would be around 650-700 leaving me again with about 100-150.00 per month not counting the 40% you refered to.

I absolutely love this business and want to continue on. I really really appreciate everybodies advice. I am learning. :)

What I have been doing when I refinance is putting back the intitial down pymt for another house and using the rest to pay off debt. Like last month I paid off 10k in credit card debt. YUCK.

Thank you for the help...

Actually I really don't have any of my money in these deals. I do put 20% down to purchased a distressed/foreclosed property that could be worth on average 60k when remodeled. I may purchase the property for 20k put 10k into it and only be at 50% loan to value. At this point I do have my 20% of the purchase price into it and I use a construction loan from the bank to remodel.

Heres the important step I take....

Since the total amount in including down payment is only 30k I have been converting the construction loan to a conventional at say 80% of the repaired value. This not only gives me my down payment back but usually puts 10-15k in my pocket.

An example of my monthly expenses at a 40k loan would be 310.12 p/i, 75.00taxes,20insurance for a typical pyment of 405.00 or so. I would then either rent or sell on contract with a total payment due to me of around 550.00 per month +/-. This gives me on average 125.00 per month on all my properties. This is typical rent in our central IL area. Not really expensive.

Is this a good strategy? Is it a good strategy if I am selling on contract?

Thank you

After thinking more about dates it seems that I have purchased these properties in the last 18 months or so.