All Forum Posts by: Justin Owens

Hi I am trying to sell my house off market to a neighbor of mine.  He is a contractor/ remodeler who wants to turn my house into his first rental.   He has been been denied approval from the lender he is currently working with. 

He can provide income and bank statements for past 2 years.  Has plenty of money in the bank, and a great credit score.  Quite frankly i'm surprised he was denied. I'm thinking maybe he just isn't in contact with the right lender.  As he was mentioning to me a  Conventional Loan 80/10/10. 

Can anyone recommended a lender who can work with him in the Indianapolis Area? 

@Account Closed

$3000 for closing costs is pretty high in my opinion. Make sure you get the seller to cover the closing costs. With FHA you can have them cover a percentage of the purchase price towards closing.

My own example- 7 years ago just before the melt down I bought my personal residence with FHA 3.5% down. I had the seller contribute 2% toward closing costs and I had the rest of the Closing Costs rolled into the loan. I only had to come to closing with my down payment money and I think a prorated amount for fire and flood insurances. The actual amount besides my Down payment was less than a $1000.

Duplexes in Indianapolis are hard to sell, so you should be able to get the seller to put up some money to help cover the closing costs.

Just heard on the radio today that TCU here in Indiana is waving closing costs for all mortgages. Just have to apply by the end of the month. Pre-approval expires after 90days. 

If I were you i'd go ahead and just get a hold of the mortgage officer at your bank. Go thru their pre-approval process. So you know what you are getting into and what you qualify for.  Its free to do this. 

@Trina Hanks 

If its an area you like, I'd still go look at the property and get the Seller to outline those terms for you just so you can learn more about the process and you can learn to evaluate properties in person.  Ask him for the rent history and Lease agreements. 

Typically a 5 year term is still amortized as a 30 year note, and the ballon is the remaining balance. So you aren't necessarily paying an extra $40K at the end. That 40K is going to count towards something. Its not the 40K that sounds predatory, its the 60% rent over 5 years that sounds predatory.  

@Trina Hanks 

Trina, I think you need to obtain some more info on the deal. 

Purchase price?

Does the seller have a rental history that can support that monthly rental income? Are you confident in that rent range for that area? 

One thing about seller financing is that everything is up for negotiation. They have stated terms in the listing. So definitely don't just take terms as they are.

You gotta get what makes you happy in the deal too. 

For instance, once you learn more about the property and decide that its something you want. I would negotiate the terms more, after all the seller is the one in need of a buyer, and it must not be a property that can easily sell on its own with out the seller financing as an option.   Just with limited knowledge of this deal I would look at offering 40% of the monthly rent. Why should you give up the a majority of the rent to the seller when you are doing all the work and taking the day to day risk of new and future repairs, plus paying all insurance and taxes? 

Get inside their head for a bit and figure out why they are selling. Most Owner Financed deals involve a tired landlord who doesn't want to deal with the day to day of owning the property. Or they involve a property that hasn't much value, or is possibly upside down, or it has been a problem property that has some deferred maintenance issues?  There's a lot of reasons they could be offering seller financing, but rarely is it "this is a great property, i've giving you a deal" . They are trying to unload the property. Obviously they don't need to get their money back right away as they aren't even asking for a real downpayment. 

At 60% monthly rent, you are paying over $40,000 during the 5 year term. 

I really don't know much about including them as the additional insured on the hazard insurance. I'm not sure if thats status quo or not. 

Man it is so hard to find a good agent willing to put in a small amount of work to service a client. And in this scenariio the agent had a deal under contract and wouldn't even put in the 10minutes of work to submit an amended offer sheet.  Obviously you a serious buyer as you actually made an offer on a property and got it accepted in the first place. 

I can't imagine having that situation where my financial interests are seemingly being sabotaged by a realtor that I hired to represent me.   Good thing you fired him. Realtors a dime a dozen don't suffer one who won't represent your best interests.

With FHA you'll be paying PMI for the life of the loan. You should get a good faith estimate for what the PMI would be if you put down 3%, 5%, or 10%.

But after a few years you might be able to pay down the loan enough to refinance out of FHA if you apply extra payments.

I've have an opportunity for a 4 bed 2 bath Manufactured Home in Ingalls,  Indiana.

Would very much welcome some opinions. Because i'm just not very knowledgeable on Manufactured homes, and the location.

Home is on a foundation, and has bigger windows (doesn't looks like the smallish windows you find on most older manufactured homes), built in 1996.  Not sure if it makes a difference but has the trademark wall boards that are covered by trim strips on the vertical seams. I've seen other Manufactured homes that have regular drywall through out.

House is in decent condition doesn't seem to have any needs for major repairs. Just paint and maybe some flooring like Carpet or Laminate in certain areas, and maybe a minor rehab of the bathroom. Kitchen is in good shape, has an open floor plan. 

Located in small neighborhood that has a mixture of Manufactured and stick built homes.

I'm not sure what to think about the location. 

Safe town, Pendleton school system which is great.

Easy access to Indianapolis via Pendleton Pike. I know that towns like McCordesville and Fortville are very popular for families.  Ingalls is the next town down the road about 5 minutes. Also kind of close to I-69, which has alot of development around that area with Hamilton Town center and Medical Campus.

Being a 4 bed, I think I have the opportunity to get a long term tenant. But i'm not sure if I would have a hard time renting this property out considering the location and the manufactured aspect itself, though the exterior looks great.  

I'm looking for rent range of $850- $1000 or possible lease option in the future. I have seen these rent ranges for 3bed room houses in the same general area on Rentometer.

Am I nuts on this house? I am primarily interested in it do to the fact that the price seems like a steal and is priced identically to a home I am looking at in Beechgrove that is only a 2bed -1bath and about half the size, and needs similar repairs.

Man you are getting are getting screwed. 

$800 to lay flooring in an 10' x 4' space?  Its going to take him a couple of hours to lay that wood floor down. What are you actually paying for here? 

Also reconsider sanding all the floors to match, a small job like this your contractor should be to essentially tape off the flooring joints and match the stain to the existing floors. Unless your existing floors are tired looking....

$450 to spend an hour under your sink.

$650 to prime and paint? Again what is he painting?  It looks like your new configuration will only have the back wall and ceiling exposed.

$950 to demo. Like someone else said. 2 hours of work max.

@Donna Brown

Since you just sold your own place why not buy a small multi-family and live for free while your tenants pay the bill and you get learn all out landlording? Plus you'll be able to save up a ton of money for your next personal residence. 

 I actually had a Elevation Survey done last year, and it came back that I was 8 inches under the flood level. The survey company said when I am ready they can oversee the project to fill in those 8" with dirt.  I'm not so sure that is how the NFIP evaluates a property, when you buy Flood Insurance you are buying it for the structure, not the lot. So just because you raise a plot of the land by 8" doesn't mean you get to be exempt form the flood insurance requirement. It was my understanding that NFIP uses the elevation of the lowest level of the structure, IE basement floor, Crawl space. or slab.   The Surveying company confirm my suspicion of their knowledge when the lady told me to shop my flood policy around with this new elevation certificate. Which you can't....