All Forum Posts by: Ismael Ayala Jr.

Any suggestions on doing a primary residence house swap, creative finance deal?

Seller would like bigger home, which I have. I would like a home with a low interest rate-so I could rent out and cash flow-which he has. 

What would be the best option for both parties?

Lease purchase option for 10-15 years? Subto on conventional loans?
Contract for deed?
Mix and match these offers?

How would I transfer home insurance and property taxes without alarming lender on subto?

He has older home(>10 years) with >100K equity. I have 2023 new construction build with 20k equity. 

Any advice or suggestions will be welcomed? Thank you.

Other homeowner wants to move into larger home, which I have. And I want to rent out their home to produce cash flow with low interest rate, which they have. 

They have a ton of equity >$100K, <3%, but older home in need of roof, A/C, and water heater in next 5-10 years. I only have about 20K equity, but my home is only 1 years old, with 5.5%. I want to take over their payments, and I'll let them take over mine. My home is worth about 15K more than theirs. I don't have a lot of capital to give. But I'm thinking about other ways to keep my offer competitive. They're both conventional loans; similar loan term lengths.

1) Any ideas on how I would structure this? I can offer maybe 5K upfront for incentive, not much I know. But the seller would save costs from lack of realtor fees. Should I offer additional $100/month from rent for certain amount of years?

2) Any advice on good title companies that can help us navigate this unique, creative deal for a house swap?

3) About how much would closing costs be for 2 homes on a creative finance deal? If I could cover closing costs that would also be a good incentive. But I can't if closing costs are 3-5% for purchase price of each home. 

4) How do I protect myself and give the seller assurance from renters with the structuring of the home insurance? Should I ask the seller himself to change it to renters insurance to avoid the due on sale close? It'll cut cash flow not by much, maybe $75-$100. Cash flow is around $550 to start, it'll drop to $450 I think. If I give sellers $100 from rent proceeds, it'll drop to $350 monthly.

5) Do I need just a promissory note for both of us to sign and deed transfer document? 

6) Any advice on how I can be creative, without giving up anymore cash flow? Anything else, Im missing?

I have heard of keeping the 2 documents seperated, thank you for confirming that for me. I spoke to a local lawyer who mentioned keeping all documents together instead of seperated, as being sufficient enough to cover all legal issues. That advice was different from what I usually heard in the investment circle on Facebook, YouTube. So I don't think that'll be a good partnership moving forward it seems. The more I look into lease option, the more of a specific, niche market it appears to be, especially with the nuances of the legal ramifications if done incorrectly. Thank you Joe, I appreciate you taking the time to respond. 

Regarding nonrefundable deposit on lease option to purchase for a home selling for $375K.

What does the nonrefundable deposit entail?

1) For illustration purposes is it (10K) upfront that the seller gives back to the buyer? To assist with the bank required down 3.5%, 5% down payment?

2) Is there a portion of that nonrefundable deposit that is considered the cost for the lease option?

3) Do I charge seperate for a lease option in addition for nonrefundable deposit?

4) If lease is ending, and the buyer decides not to purchase home for whatever reason: Unable to obtain financing through lender, doesn't want home, change in job location, etc. does the buyer or seller keep that nonrefundable deposit?

5) If the seller wants to rent another year or so after current lease is up, do I apply another nonrefundable deposit. Or does it carry over?

6) Any knowledgeable real estate lawyers you can refer me to that can draw up this contract for me.

We're looking to convert our current home into a rental with the option to purchase.

Would anyone happen to have any thoughts, tips, recommendations on structuring a lease option? I've heard of a seller acknowledgement form, having a limited power of attorney, nonrefundable deposit, etc. I even heard of a landlord being sued and losing and having to back pay all the rent payments. 

I figured I'd speak to a real estate lawyer recommended by a investor friendly title company.  I have one in mind, but before I go and speak to them, any info from knowledgeable professionals/landlords is welcomed. Thx.

In the meantime, I'll scour posts for any info about this topic on BiggerPockets.

My local housing authority put in some vague language to the payment standards for the landlord. And I need some clarification from those who are section 8 landlords.

Regarding the actual payment to landlords, they said, "Once it passes the inspection and rent comparability (this is where we make sure your asking rent is the same as the market), the housing specialist will give the move in approval."

What is this "rent comparability" language? I do know that HUD posts rates and the local housing authority can pay between 90-110% of that payment standard for the particular zip code the property is in. In my particular case the lower end of HUD payment (90%) is still much higher than market rents. So does that mean the local housing authority has the ability to pay less than the lower payment standard of 90%? I'm very nervous about that vague language of "rent comparability".

I've heard about LLCs for a little while(Wyoming being the most popular) and the tax and liability benefits that come with it. So I have 2 questions.

1) Can a bank initiate an acceleration clause because they find out your primary residence or investment property is in a LLC? This is something I've recently heard and is new to me.

2) How would you structure your home(s) within a protective entity such as a land trust and/or LLC?

I watched a YouTube video recently(my watch history was off, smh) and I accidentally backed out of the screen and lost the clip. 

I understand BiggerPockets has calculators, an exhaustive list at that. However, I'm looking for a website that does a NOI, cash flow analysis SIDE by SIDE comparison. The website allows you to input your properties/portfolio into the data base, and interchange different scenarios. Ex: You own 5 properties. You can input and sell one property to pay off 2 other properties. And it will give you a side by side comparison of your decision to either stand pat or go through with the transaction. By comparing NOI, cash flow, cap rate, etc.

Does anybody have an idea, which website it could be? I'm sure someone here uses that particular website. I can't remember the name, but if someone post's the website, Im pretty sure I'll remember. It was a unique website name that you wouldn't associate with financing.

Thank you in advance!

I recently bought a new home and rent my old home for cash flow of $400. Buying my second home with traditional lending was my first step into real estate investing. Throughout my research over the past 6 months I've learned about creative financing which intrigues me and is something I would need to learn about moving forward to scale my portfolio. 

I recently got in touch with a local coach/mentor in seller financing in my area. We spoke for a little while, but I figured I was being vetted. Coaching was not brought up in the first call, so I made a 2nd call to clarify pricing for his mentoring services. He said, unfortunately he had no more spots available as they were recently taken up the week prior. It kind of felt like I was being "let down" easily. Meaning I was not a good candidate for his student profile.

Here is my background info that I gave him.

1) I have 2 homes, I live in one, cash flow on the other.

2) I have little reserves, <10K but building up quickly. Should be above 10K by summer. 

3) I have a >$100,000 in equity that I am very hesitant to use. But only for the right situation. 

I couldn't ask him why he rejected me. As he technically didn't, but I kind of read in-between the lines.

My question is: Where can I be better for a coach to see the benefit in training me. Was I too close to the mentor and presented competition? Did I not have enough reserves? Or a combination of other factors I'm not mentioning. 

But in all transparency, I'm already leaning very heavily on just learning by myself via online, YouTube,  Bigger Pockets, books, and Carleton Sheets No Money Down course.

Thx in advance for any input. Brutal, constructive honesty appreciated, lol.

 I agree, thank you for the advice. I recently found a wholesaler who presented a sub to wrap around through a Facebook page in my home town-which is what I prefer due to the proximity to my primary residence. I realized I didn't have any equity in the deal and I also didn't have a clear exit plan if something were to go wrong. 

But then I thought to myself, what if the numbers did make sense? How would I go about that deal? Would the wholesaler realize I was a newbie and try to take advantage, etc. So there was a little anxiety of the unknown you could say and maybe a fear of missing out on a home right in my own neighborhood. But I eventually took a deep breath this past weekend and passed on the opportunity, lol.

That's the reason for the question. I have equity and would like to make it work for me. But I'm also aware of the risks and setbacks of getting into the wrong deal. Thx again, I appreciate the advice!

FYI, after I was turned down by a local sub to mentor to be my coach, I dusted off and have been studying Carleton Sheets, No Money Down real estate program, that a family member gave me over a decade ago. Needless to say, I've been scouring for information on YouTube, BiggerPockets, online websites etc.