All Forum Posts by: Farrukh Amini

Good plan. A couple of call outs:

If you are actually able to get the seller to accept a 30% discounted offer less rehab costs with no money down and seller carry, please let me know where to sign up for your deal negotiation course because that is some ninja level negotiation skills. 

I’d recommend to negotiate seller carry for 12 months to give yourself enough cushion because refi takes time. Since the seasoning is 6 months, you would start the refi after. Also keep in mind with most commercial loans that the “seasoning” period start from the moment you place tenants in. 

I've done a few different JV deal structures on our buy and hold properties and the one that was similar to your situation where I was boots on the ground, did all the managing and accounting, and the capital partner contributed the down payment, closing costs, and all rehab costs we did a 30/70 split on the ownership and cash flow (70 to capital partner) until we are able to cash out refi and pull his initial capital out where we become 50/50 partners.
This is just to give you an idea. By no means this is a rule or standard. Any split is fair as long as you and your partner agree to it based on the value you bring and receive to and from each other. 

Your monthly payment is close or little lower compared to rent comps, so that’s a good strategy when offering owner financing. 

The ideal down payment in my experience to charge when selling on owner financing to end buyer is in 10-12% range. That opens up your pool of buyers. But you’re under 15% so that’s not too crazy. 

To answer your question it depends on the local demographics whether that’s too much or not. The only way to find out for sure is to create a list on FB and see what kind of response you get. 
There are small businesses owners who do not qualify for a conventional loan due to lack/bad credit or unconventional jobs but have stable income. 

I agree with @Jody Sperling, quality over quantity to get the best cash flow while building equity. 

Jay and Jody gave you solid advice. I just want to add one thing, look into creative financing strategies like buying with owner financing, subject-to, contract for deed to open up your possibilities to buy with no it low money down. 

That was a lot of reading but looks good as far as the things you're covering. You may be overthinking a few things, but better be too much than missing something, I guess. A couple of things I want to point out quickly is that since the deed is transferring to your entity the possibility of the seller filing for bankruptcy shouldn't affect the property as they do not own it any longer. Definitely take the deed in the trust to reduce the risk of DOS. Make sure to change the policy and include your trustee and trust as the primary payee and the lender and beneficiaries additional insured. POA is needed to get you added as an authorized user on their mortgage account. I'll PM you a list of my CYA disclosures, feel free to have your attorney review them and use as needed.

Hey JC,

If the seller already accepted your terms then Your next step would be finding an attorney (since it seems you're pretty new to this) who has experience with seller financing and having them prepare an agreement based on how you're taking over the property (CFD, Wrap, etc.) and other disclosures and getting them signed by the seller. The attorney can direct you on the following steps and they typically work with a title company that can do these types of deals.

Cindy, JV stands for joint venture. In other words, JV on a deal means to partner up on a deal. Hope that clarifies it.

Investment Info:

Single-family residence other investment in University Park.

Purchase price: $130,500
Cash invested: $15,000

Creative deal (subject-to)
3bed/2bath SFR/renovated in 2016/2car garage/6k sqf yard
Purchase price: $130.5k
Down: $5k
Closing and repairs: $10k
(total out of pocket $15k, took over $125.5k loan with 4.5% rate)
PITI: $1347/month
(No other expense as we're the bank)
ROI:
All out of pocket: $4k (20k from buyer - 24k buying & selling costs = 4k left in the deal)
Cash flow: ~$350/m ($1700 from buyer - $1347 PITI = 353/m profit)
CoC: 105% ($4.2k annual net / 4k cash in the deal = 105%)

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

tired of being a landlord and dealing with tenant/property management, so started to pivot from being a landlord to becoming a bank

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

through marketing and networking with wholesalers - asked for their trash leads

How did you finance this deal?

own funds (myself and my partner)

How did you add value to the deal?

Buyer needed to relocate for a job transfer and wanted to sell, but due to market prices and the amount they owed on their mortgage, they would've had to come out of pocket ~$10k to sell with an agent. We came in with terms offer and solved their problem saving them about 10k in selling expenses, and giving them money to move and close on the date of their choice. Seller didn't have to list and have the property sit on the market for 60-90 or more days having to pay additional mortgage plus rent

What was the outcome?

Dispo: sell on owner financing with CFD (deed stays with us until paid in full)
Sell price: $161k (Owner financed at 7.9% on a 30yr amortized loan)
Down Payment: $20k (12%)
PITI: ~$1700/month
(Buyer responsible for all expenses and benefits of homeownership)

Lessons learned? Challenges?

Remote market - virtual. Had to quickly reach out to people and put boots on the ground to facilitate the entire process.

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

Brittney Wikinson with Compass is a beast!

Investment Info:

Single-family residence other investment in University Park.

Purchase price: $130,500
Cash invested: $15,000

Creative deal (subject-to)
3bed/2bath SFR/renovated in 2016/2car garage/6k sqf yard
Purchase price: $130.5k
Down: $5k
Closing and repairs: $10k
(total out of pocket $15k, took over $125.5k loan with 4.5% rate)
PITI: $1347/month
(No other expense as we're the bank)
ROI:
All out of pocket: $4k (20k from buyer - 15k buying costs - 9k selling costs = 4k left in the deal)
Cash flow: ~$350/m ($1700 from buyer - $1347 PITI = 353/m profit)
CoC: 105% ($4.2k annual net / 4k cash in the deal = 105%)

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

tired of being a landlord and dealing with tenant/property management, so started to pivot from being a landlord to becoming a bank

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

through marketing and networking with wholesalers - asked for their trash leads

How did you finance this deal?

own funds (myself and my partner)

How did you add value to the deal?

Buyer needed to relocate for a job transfer and wanted to sell, but due to market prices and the amount they owed on their mortgage, they would've had to come out of pocket ~$10k to sell with an agent. We came in with terms offer and solved their problem saving them about 10k in selling expenses, and giving them money to move and close on the date of their choice. Seller didn't have to list and have the property sit on the market for 60-90 or more days having to pay additional mortgage plus rent

What was the outcome?

Dispo: sell on owner financing with CFD (deed stays with us until paid in full)
Sell price: $161k (Owner financed at 7.9% on a 30yr amortized loan)
Down Payment: $20k (12%)
PITI: ~$1700/month
(Buyer responsible for all expenses and benefits of homeownership)

Lessons learned? Challenges?

Remote market - virtual. Had to quickly reach out to people and put boots on the ground to facilitate the entire process.

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

Brittney Wikinson with Compass is a beast!

Investment Info:

Single-family residence other investment in University Park.

Purchase price: $130,500
Cash invested: $15,000

Acquired on terms (subject-to)
3bed/2bath SFR/renovated in 2016/2car garage/6k sqf yard
Purchase price: $130.5k
Down: $5k
Closing and repairs: $10k
(total out of pocket $15k, took over $125.5k loan with 4.5% rate)
PITI: $1347/month
(No other expense as we're the bank)
ROI:
All out of pocket: $4k (20k from buyer - 15k buying costs - 9k selling costs = 4k left in the deal)
Cash flow: ~$350/m ($1700 from buyer - $1347 PITI = 353/m profit)
CoC: 105% ($4.2k annual net / 4k cash in the deal = 105%)

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

tired of being a landlord and dealing with tenant/property management, so started to pivot from being a landlord to becoming a bank

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

through marketing and networking with wholesalers - asked for their trash leads

How did you finance this deal?

own funds (myself and my partner)

How did you add value to the deal?

Buyer needed to relocate for a job transfer and wanted to sell, but due to market prices and the amount they owed on their mortgage, they would've had to come out of pocket ~$10k to sell with an agent. We came in with terms offer and solved their problem saving them about 10k in selling expenses, and giving them money to move and close on the date of their choice. Seller didn't have to list and have the property sit on the market for 60-90 or more days having to pay additional mortgage plus rent

What was the outcome?

Dispo: sell on owner financing with CFD (deed stays with us until paid in full)
Sell price: $161k (Owner financed at 7.9% on a 30yr amortized loan)
Down Payment: $20k (12%)
PITI: ~$1700/month
(Buyer responsible for all expenses and benefits of homeownership)

Lessons learned? Challenges?

Remote market - virtual. Had to quickly reach out to people and put boots on the ground to facilitate the entire process.

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

Brittney Wikinson with Compass is a beast!