All Forum Posts by: Jody Hawkins

Loan closed last week, note paid in full.

Thanks all

I have a cheap little house. I have 50K in it selling at 65K. I have a buyer with 25K down that wants a 1 year loan @ 6% until they can get there affairs together for a conventional loan. I am almost seeing see this as a "Lonnie Type" deal, but with stick built house. I have done some owner carry's in the past, but usually with investors not occupants. Buyer is a bit timid concerning documenting income, but honestly the risk is pretty tempting with over 30% down which quite enough (and then some) for a complete rehab. Looking for open comments. Thanks Jody

I did close this deal, figured I’d post a follow up.

Sales price was in fact $25k, as buyer received cash back at closing.

Contrary to advice given did not double close the deal. All cash transferred outside of closing was deposited into realtors trust account approved by all parties.

Did get suggested lenders title policies. As attorney suggested we also did away with “release†clause on second deed of trust. Second property has a value of about $150K with approx $90k remaining on first mortgage. No appraisal, but I have a pretty good feel of the local market.

All proceeded well, all documents recorded, I officially have about $21.7K into the $25K note@ 11% with balloon in 3 yrs.

Why did I do this against folk’s advice here?
1) It’s a small town and with a little more homework I had numerous business associates (including my accountant) vouch for the integrity of the other two parties. I know personal recommends are basically useless, but it helps to know folks have had a good past.
2) This deal fit the buyers MO. He owes approximately 70 other rental properties in the area. Almost all are lower income rentals; a quick trip to the court house didn’t throw up any red flags on properties owned by him or his entities.
3) The second property used as collateral in this deal is in his personal name. Even if I was unable to produce cash from foreclosing on that property, A foreclosure to a property in his personal name would create harm to his business model.
4) If I end up owning this house myself at under 25K I'll be very happy. I drove by this weekend and the repair crew is hard at work. The buyer already has the house advertised as a $550 a month rental.

At this point it is what it is, and I am fairly confident my bases are covered. I did have my attorney look over everything. He (and his colleague) did give all documents a thumbs up.

If for some reason things go sour, I'll post so everyone can say I told you so.

Thanks again for all the advice, it was extremely helpful.

Thanks folks,

Advice noted. Property is an REO.

Still waiting for all docs to be put together for attorney review.

Jody

Am I missing anything? I am providing financing for the deal.

Wholesaler formed a land trust and said land trust has property under contract for 15K.

Buyer (LLC, but no personal garuntee) to pay 25K for property.

I bring in $23500 additional funding ($1500 earnest money is mine), The plan is to avoid double closing by having realtor (3rd party outside of closing) assign beneficial interest of trust to Buyer, for $11500. Of which buyer will return $5000 to me. Title compay then to close contract tranfering propety from current owner to land trust (now owned by buyer). End product is $25000 note @11%APR, amort 15 yrs, balloning in 3yrs (secured by deed of trust and $6100 DOT/release fee on another of buyers property (in 2nd position but more than adaquate LTV))

Thanks in advance for comments.

Can 2 IRA's be used to fund a "Checkbook IRA LLC". Basically wondering if my wife and I can use the LLC concept to increase our buying power?

Thanks

Well I sold this prooperty to my flipper for a quick 10K profit and agreed to carry the paper interst free for 6 mos. The contract included a 5% penalty for being late. They invested about 15K into rehabs. When default occured the penalty was added to the balance and I received 22K from them to avoid forclosure and extend the loan for an additional 12 mos. at 10%. Any critiques? I'm pretty happy, but curious if I should have done different?

After 6 mos. I get an extra 1% of his selling ARP price, after 12 that bumps to 2 %.

Work involved is alot of elbow grease, enclose carport to garage, some sheetrock work, ext. and int. paint, redo hardwood floors, kitchen cabinets refaced, and of course baths need some work. He is expecting 3-4 months for the work.

What I am really looking for is a way to step in and buy this house, and have him do all the work without actually having to "hire" him. We have a tenative agreement as outlined above, but as I started pondering the legalities I have come to the conclusion this was a little more complex.

He does great work, but is not a liscensed contractor (I've seen 2 other houses he's done). I imagine this has leagal and liability issues. I would then be reponsible for building permits and such. Not to mention w9' and 1099's.

Am I making this more complicated than it is? Barring these complexities I am actually very comfortable moving forward with this guy. But it occured to me it might just be a whole heck of a lot easier to wholesale it (and carry the paper) to him and let him handle all the hassles.

Hi Folks looking for structure advice. I had originally planned to act as a hard money lender for a flipper I know. Turns out I found a property and negotiated good terms with the seller that would baulk if he knew someone else was involved. So I have the property under contract for 115k. My flipper is willing to do all rehab work for all profit over 10K, with provisions for interest for time after 6mos.

Should I buy the property and hire the flipper as a contractor or act as lender and have him take deed to the property?? Any and all advice appreciated.

Thanks