All Forum Posts by: Farrukh Amini

I agree with Waylon, first make sure there are no problems with the properties. It’s a hot market, pretty much everywhere so I’d be curious to see the motivation to sell these at 80% market value. 

If all checks out, run the numbers to see if they have good cash flow as rentals if you do lease option for 5 years. Your cash on hand would be enough for an option fee. Then you turn around and rent these properties and while you cash flow, try to save up for 20% down payment in the next couple years (the option fee can be counted towards your down and you can negotiate portion of your monthly payments as credit towards your purchase price). Once you have the money and ready to exercise your option to purchase first try to talk to seller to see if they would be open to owner finance it for you with that 20 percent down since you will have shown them that you are a responsible renter. If that doesn’t work you go get a loan. 

Another way to go about it would be bringing a capital partner to fund the down payment. 

Sounds good. I'm interested 

Yes, that's called buying subject to the underlying loan. Just make sure you get your paperwork and clauses drawn up by an attorney who's familiar with these deal structures so you and the seller are both protected. The seller needs to know and acknowledge the due-on-sale risk and a few other important things, like the fact that this mortgage will still be counted towards his DTI when he gets a new loan. Even if you provide documentation that the seller is no longer responsible for payments, most lenders require 6-12 months seasoning before they can remove it from the seller's DTI. But this is relatively easy. Good luck

Yes an amortization schedule gets attached to closing documents. Seller/You (depending on what you agree upon, most likely you’ll take care of it because most sellers are not that savvy with this) either do it yourself or hire some to prep it for you or your attorney can do it for your for extra fee. The seller will have the copy and will know how much is being paid based on that schedule. It will be your responsibility to make payments according to the schedule, and if you decide to make extra payments you will have to update the payment schedule and also keep track of interest paid. Seller has to give you 1098 with the interest paid. You can also hire a mortgage servicing company to take care of all of this and have them make payments and send statements to all parties involved. 

Firstly, lease option or purchase is the technical term for what’s known commonly as rent-to-own, which is a two part transaction, you have a lease contract and then an option or obligation (depending if it’s option or purchase agreement) to purchase contract. It’s basically landlord- tenant situation. I personally do not like this route mainly because of potential successful equitable interest claims that could arise if the optionee doesn’t go through with the purchase and wants their option fee or claim equity.
Selling on Land contract, aka contract for deed is my go-to strategy. It’s a plain and simple sale and in case of default you know that you go to foreclose instead of wasting your time trying to evict. Also, since it’s a sale you are able to collect a bigger down payment while still holding the title. 

 Yes, he can, with provisions in the Trust language

yeah it's been tough ever since the pandemic. We've been dealing with vacancies in our student housing units. Used to market via Zillow until they started charging. Now only via FB marketplace. 

Not an accountant, but based on my knowledge it would be best for him to do an installment sale, take a small down payment upfront and hold the note on the balance and get payments over time thus reducing his tax liability within each year. The best way would be to put all the properties in a trust before closing so in case he passes they don’t go to probate. 

Happy to help!
In my experience, for the seller to be open to owner financing or other creative terms offer, my offers had to be close to asking price or market value (90-100%) less repairs. Sellers with equity almost always want an upfront down payment 10-30% of the price. Only when there’s no equity or negative equity then you can take the deed subject-to and they just walk.

You're right, without much details it's hard to give you useful recommendations, but to give some ideas, depending how much cash you have on hand and how much you're willing to come out of pocket upfront, you can offer to pay the mortgage off if the balance is small and have the owner carry the balance as note, or give him some money upfront for his needs and ask him to leave his mortgage in place so you can do a wraparound mortgage where you mirror his mortgage payments plus the payments for his remaining equity based on agreed terms, or you can just take the deed subject to existing mortgage and give the seller a separate note on his equity as a second, you can do CFD where the deed stays with the seller and you make payments wrapping his mortgage and equity, there are many different ways to go about it. First step is to get as much info as possible, like what kind of mortgage is it (for example USDA loans have residency requirements that make subject-to impossible), how much is the mortgage balance, how much is the PITI, how much upfront cash does his want, how much work does it need, etc.