All Forum Posts by: Christopher Robert Noland

Quote from @Bill B.:

First, I’ll send my hopes and prayers to the seller that you can perform. They are taking a MASSIVE risk on this deal. I assume there’s no realtor involved or they’d be upside down. Maybe they’re charging over market or could find a buyer. 

That being said. You’re asking for less than 4% annual appreciation to get over 20% equity. If there’s appreciation you refinance. If there’s no appreciation you walk away. You collected 60 months of rent while only investing $2,500. The seller will also be incentivized to extend their seller carry if there’s been no appreciation or the building has deteriorated during those 5 years. 

they haven’t sold the house in 90 days not a hot area. I’m looking to rent it section 8 there’s a market for it. The Payment is not an issue but I’ve just never done owner financing and someone suggested this method as a way to acquire section 8 homes in low crime areas.  

So once I pay 20 equity into this deal with the seller, I could refi the house and pay off the seller ?

the options I saw were :

“Some lenders treat the transaction as a rate-and-term refinance rather than a purchase. This eliminates the requirement for a new down payment since you are refinancing the existing debt.

• Lenders typically require:
  • A copy of the owner-financing agreement.
  • Proof of on-time payments (6–12 months).

What to Do:

• Find lenders that offer rate-and-term refinancing for owner-financed properties (portfolio lenders and DSCR lenders often do this).
• Maintain a clean payment history.”

 Or 

“In some cases, the seller may agree to subordinate their loan to the new lender. This means the seller-financed loan becomes secondary to the new mortgage, which satisfies the lender's LTV requirements.

• How It Works:
  • Lender issues a new 75% LTV loan based on the property value.
  • The seller retains a subordinate lien for the remaining balance until paid off.
  • No additional cash is required from you.”

Say I can get an owner finance on a 99k house for 5 years with a balloon payment. $2500 down. 

Then rent it out. Investment only. 

How does one take the owner finance situation to a bank and turn it into a 30 year loan to hold without an additional down payment of 20 percent ? We are not flipping the house are are just trying to acquire it. 

What type of loan and lender would allow that ? I know someone who does this but they won’t give up the secret. 

Quote from @Minji Kim:

Hi @Christopher Robert Noland,

Actually, I’ve been looking into Pennsylvania a lot since it's closer to New York, which has its advantages. Do you have any recommendations for areas in Pennsylvania? I was looking into the Reading and Scranton areas!

 Pittsburgh is up and coming but the distance is pretty far from the others. If you can find deals in those markets use Redfins market analysis tool and see how long the homes are taking to sell, how competitive and where are people moving to/from and that area and if it’s growing or not. 

Quote from @Lance Turner:

Quote from @Christopher Robert Noland:

When approaching the seller about seller financing, especially given the unique nature of the property and potential challenges in selling it, it's essential to frame the conversation in a way that highlights the benefits for both parties. Here’s a step-by-step approach you can take:

### 1. **Do Your Research**

- **Understand Seller Financing**: Familiarize yourself with the mechanics of seller financing, including how it works, the benefits for sellers, and the risks. This knowledge will help you answer any questions the seller may have.

- **Market Analysis**: Gather data on the local market, including comparable sales, average days on the market, and trends. This will strengthen your position when discussing the property's value.

### 2. **Schedule a Meeting**

- **Set Up a Face-to-Face Meeting**: If possible, arrange to meet the seller in person. This creates a more personal connection and allows for a better discussion about the property and financing options.

### 3. **Build Rapport**

- **Acknowledge the Seller’s Situation**: Start the conversation by acknowledging the seller's desire to move further out and his long-term ownership of the property. Express understanding of his position and why he might be looking to sell.

- **Discuss the Property’s Unique Aspects**: Talk about what makes the property special and your appreciation for it, but gently introduce the reality of its market position.

### 4. **Introduce the Idea of Seller Financing**

- **Present It as a Solution**: Frame seller financing as a creative solution that benefits both parties. You could say something like:

- “Given the unique nature of this property and the current market conditions, have you considered seller financing? It could help attract buyers who may be hesitant due to the price point.”

- **Highlight Benefits for the Seller**:

- **Quicker Sale**: Explain that seller financing can make the property more appealing to potential buyers, increasing the chances of a quicker sale.

- **Income Stream**: Discuss how seller financing can provide him with a steady income stream while still retaining ownership of the property until the loan is paid off.

- **Tax Advantages**: Mention potential tax benefits of seller financing, as he may be able to spread out the capital gains tax liability over time.

### 5. **Address Potential Concerns**

- **Clarify Terms**: Be prepared to discuss terms, such as the down payment, interest rate, and duration of the loan. Having some preliminary figures in mind can help facilitate the conversation.

- **Reassure about Risk Management**: Address any concerns the seller might have regarding the risk of financing a buyer. You can suggest performing background checks, credit assessments, or offering a higher down payment to mitigate risk.

### 6. **Listen and Adapt**

- **Gauge His Reaction**: Pay attention to the seller's response and be open to his thoughts and concerns. This can lead to a more productive conversation and help you refine your proposal.

- **Be Flexible**: If he seems open to the idea, be willing to discuss different terms or options that might work for both of you.

### 7. **Follow Up**

- **Provide Written Details**: After your discussion, send a follow-up email summarizing the benefits of seller financing and any agreed-upon terms to keep the conversation going.

- **Stay Engaged**: Keep the lines of communication open and express your continued interest in the property, even if he needs time to think it over.

By approaching the seller with empathy, clear benefits, and a willingness to listen, you can effectively plant the idea of seller financing and potentially create a mutually beneficial arrangement. Good luck with your negotiations!

 I've never seen better and more thorough advice on this forum.  Thank you!

No problem!

Quote from @Sammy Lyon:

Quote from @Christopher Robert Noland:

To sell it. Bc buyers can request to skip properties that don’t offer it. 

 simple and to the point! lol

Yup! It’s a new game now.  Buyers agents will need to get an agreement signed that they get paid if the seller doesn’t. 

Some lenders will use 75 percent of the potential rental income to qualify if it is empty in a DSCR loan. You probably will need a hard money loan

It sounds like you're facing a typical challenge with a flip property where interest isn't quite translating into offers. Here are a few strategies you can explore to address the current situation:

### 1. **Diagnose the Problem:**

- **Market Conditions**: Check if other similar properties in the area have also seen slow movement. If other homes are selling slowly, this may be a broader market issue.

- **Feedback from Showings**: It’s important to get detailed feedback from potential buyers and their agents. If the lack of showings is due to specific concerns (like the cesspool or possible mold), address those issues head-on.

- **Address the Mold Concern**: If one buyer raised mold concerns, even without evidence, it might spook other potential buyers. Consider having a mold inspection done and include the report in your listing documents to remove doubt for future buyers.

- **Cesspool Issue**: While cesspools are common in your area, the limitation of not being FHA-eligible could be a barrier for many buyers. Highlight the benefits of conventional financing or cash offers, and ensure that the cesspool is properly disclosed.

### 2. **Reassess the Pricing Strategy:**

- **Current Pricing**: You’ve already made a price cut from $259,900 to $249,900, and while there has been some activity, it hasn’t yielded offers near your target. Look at how your property compares with others in the price range.

- **Time on Market**: After two weeks, it's a bit early to panic, but the lack of significant showings does suggest something might need to be adjusted.

- **Next Price Cut**: If you’re going to drop the price again, it’s important to make the cut meaningful enough to generate new interest. A reduction in the $5,000 range may not move the needle enough. Dropping the price by another $10,000 to $15,000 could help get it closer to what the market can bear.

- If your goal is to sell at a minimum of $225,000, consider dropping the price to around $239,900 or $235,000. This could open up a new pool of buyers.

### 3. **Marketing Enhancements:**

- **Highlighting Key Features**: Ensure that your listing photos and description emphasize all the positive aspects of the home (recent renovation, location in the Poconos, proximity to amenities). Consider hiring a professional photographer or even staging the home to make it stand out.

- **Addressing the Cesspool**: Since the cesspool is a known issue, consider including some language in your listing that reassures buyers this is normal for the area, and perhaps offer to cover some closing costs or provide a credit toward upgrading the system if necessary.

- **Attracting Different Buyers**: Look into alternative financing options such as seller financing for buyers who may not qualify for conventional loans, or market the property more toward cash investors. Airbnb investors could also be interested in this type of property, especially in the Poconos.

### 4. **Timing:**

- **Seasonal Market**: As you’re aware, selling in the winter can be challenging, especially in areas like the Poconos, which may slow down during colder months. If you don't get more traction in the next few weeks, you might want to decide whether it's worth holding and renting out or continuing with a sale at a lower price point.

### 5. **Plan B: Refinancing and Renting**

- If you aren't getting the price you want, refinancing and renting the property could give you time for the market to recover. Since you’re aiming for a minimum sale price of $225,000, if offers aren’t hitting that number, renting could help cover holding costs while preserving your long-term profitability.

### Final Thoughts:

- Consider a modest but impactful price drop to $235,000, which is closer to your minimum acceptable price, and simultaneously address any concerns buyers might have by being proactive with inspections and disclosures (mold, cesspool).

- Don’t hesitate to tweak your marketing strategy or even target alternative buyer groups like cash buyers or investors looking for vacation rentals.

- If you don’t get significant movement within the next few weeks, preparing for a rental strategy might be the safest way to avoid holding onto the property through winter at a loss.

How bad do you want them to move out? Some people will leave because you want to raise it $25 out of principle and the longer it’s empty the longer raising the rent was pointless. If the tenants are long term paying tenants leave them be. You will not last long if you feel you need to squeeze every dime out of every tenant. 

Why ? 

This is a relationship based business from lender to client etc. So I use whomever is the most reliable with the best terms.