All Forum Posts by: Erik Sanders

Thank you @Bob E.

I did run my numbers factoring in the extra note and the cashflow still yielded a 50%+ percent CoC ROI but you're right, I will definitely check.

That is an excellent suggestion, I hadn't considered that. Thank you!

 Hey @Wayne Brooks thank you for taking the time here. I hadn't considered that lenders might be willing to use the seller carried contract as the down payment on the loan. I figured as the borrower you would need to fund it in order to have skin in the game. Have you done this method before?

Thanks so much. 

 Hey Nathan, thank you for your perspective here. It is definitely not my intent to defraud anyone. Past lenders have communicated that they factor the down payment calculation by the total price even including carried contracts and I was hoping to use the down payment % on the mortgage note only. 

That was my assumption as well and I would likely need to be sure and communicate to the seller that they would be in second position with the lien. 

Thanks so much.

Hey BP Community!

I found an incredible deal (a bit out of my price range) but trying to ask HOW CAN instead of can't.  

With some finesse, I got the seller to agree on some creative financing. I so have some questions on how a partial seller carried contract is structured through Title and with a loan legally. Here is the situation:
-Asking price was $1.55M, negotiated him down to $1.4M total
-Financing is through a DSCR loan at 15% down (for an Airbnb)
*my problem is that I only have enough funding for a purchase price of around $1.1M, so I got the seller to agree to carry a contract for the remaining $300k at 10% APY interest only payments until we refinance.

Final terms:Total cost $1.4M (loan for $1.1M and $300k carried by seller)

Questions: Do I need to mention to the bank that the seller is carrying a partial contract? Or would they only need to know that the seller agrees to a purchase price of $1.1M? I do plan to have a PSA with the seller privately with the carried contract terms for the remaining $300k.

Secondly, how would this work through title recording? Does the seller need to get placed as a second lean on the property and be listed on the deed?

Any professional insight would be great here! Home is in Phoenix (85020) for reference!

Thank you all!

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Portland.

Purchase price: $550,000
Cash invested: $27,500

Bought this new construction duplex to operate as a house-hack STR. Purchased with creative financing utilizing a 5% owner-occupied loan. Plan is to eventually operate both units as STR's. Though even operating one unit as a STR is yielding a 47% Cash-on-Cash ROI annually!

What made you interested in investing in this type of deal?

My goal was two fold, eliminate my largest expense of housing, and capitalize on the economies of scale with multiple units. I knew the short-term rental model would allow me to reach my financial independence goals much quicker with far less units.

How did you find this deal and how did you negotiate it?

Found on the MLS, by researching price reductions. Owner/Developer was in a pinch with her construction loan coming due, negotiated over $40k off original asking price to help her close.

How did you finance this deal?

5% owner occupied conventional financing.

How did you add value to the deal?

Maximized potential by creating an additional unit that was originally just a "mother-in-law suite" and properly separated units to function as two independent STRs.

What was the outcome?

Free housing, 47% CoC ROI with just one unit rented. Expect that to increase once both units are vacant and live. Even with just the one unit renting, we expect to make back our initial investment in less than 1 year, with plans to re-invest and purchase many more!

Lessons learned? Challenges?

The true value of time saved. We learned the importance of planning what work to delegate and what work to do yourself. We wasted many weeks taking on the backyard landscaping on our own to save a buck rather than outsource it all to professionals who would have costed slightly more, but saved us literal months of reno time.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Still looking to build a strong relationship with investor experienced agents locally in the PDX and Bend markets.

@Ken Oz Great info, I will definitely be contacting them. That was my plan actually though my portfolio lender said they would not be able to qualify it as a 4-plex even if an owner occupied one unit.

Really appreciate the help!

@Darin Marvin Wow congratulations man that's incredible!!! That's a great strategy and one I would like to use! Any tips on conveying the value to the Seller for carrying a note for you?

@Kenny Manchester Sorry my last post didn't tag you! 

Kenny,

Sorry, I should have been more clear to start! I am looking at this for a house hack!

Are you familiar with any commercial terms that allow 5% on a commercial property?

I would definitely be open to a partnership, just haven't lined one up that I feel solid about just yet!

Thanks so much for your advice!

Hey all!

I have an interesting 5-plex that came across my desk.

Any advice from experienced multi-family investors on lenders who have any loan structures allowing a lower down payment say 5% with an owner occupant?

Really would like to lock this one down, but looking to put minimal cash into this one.

Even considering the thought of figuring out how to classify this as a 4-plex with an ADU, to qualify it within FHA requirements!

It has 4 - 2/1 units and a tiny 1/1 unit.  Thoughts from anyone with experience on that front welcome!

Thanks all!

Erik