All Forum Posts by: Jake Denning

Hi Jenni,

So I am not sure what your situation specifically is (financially) but if you could not get a typical loan from the bank and get as little as 3% down then Seller finance could be a good option. Assuming she has not done any Refi's and she owns the property free and clear this is a "classic owner finance" My personal opinion would be first that you hire an attorney to draft these contracts (always when its a seller finance) the legal fees in Texas (my state) are usually between $700-$1000 for them to draft the contracts & notes for this to legally happen.

Where you should start- You need to know what the property is worth and then typically you would add another 10-15k to it as it will likely appreciate in the next 15-30 years. TYPICAL seller financing is done at 8-10% so for example on a 200k note that would roughly equate to a $1,468 payment- THERE are MANY other costs to owning a rental so make sure to read up on some of the rental investing info on BP. The only potential issue here is that 8-10% is a pretty high-interest rate so make sure your market rents will allow you to make this payment and STILL cash flow each month.  The other part to take into consideration is that this is family so you certainly don't want to step on any toes and make anyone feel like they have been taken advantage of. As far as the second part and her passing away the easiest way to make sure the transition happens from my unprofessional opinion it would be to add your husband's name to the deed as a joint-tenant and then when she passes he will just take full ownership. My full-time job is in the probate industry and the transfer of property when there is NO will or Joint Tenant can be expensive especially if that is the only property owned by the decedent. BE SURE TO CONSULT AN ATTORNEY IN YOUR STATE! It will be well worth the expense to make sure the estate is properly handled PRIOR to her passing (this is crucial!) I would also advise that you shop out several attorneys that will give you a no-obligation consultation so you can get an estimate on the cost for free. There are LOTS of attorneys out there who will gladly take advantage of unknowing people. 

I hope this info helps and if you have any questions feel free to write back here or PM me.

Best,

Jake

I will write a quick disclosure and say that I am relatively new but I have been doing quite a bit of reading on "Seller Financing" between classic owner finance and wraps.

As far as classic owner financing (free and clear property) the potential benefit there which is dependent on the owner and their outlook but when they owner finance typically they will ask for as much of a down payment they can get without letting the potential buyer totally run out of cash (so 5-10k less than what they have in the bank) the seller can also get 8-10% on interest when they do a seller finance. A typical refi- will only give you 70-80% of the LTV (loan to value) which can be a great move or lets say they have a property worth 100k and they decide they will owner finance it for 110k, they could get a 10k downpayment and the finance 100k for the next 15-30 years at 8-10%. A lot of times the potential buyer won't actually go all the way through the purchase so maybe they only pay down the debt for 2 years and then their situation changes so they leave, well then you just basically got 8-10% on the 100k for the last two years and then you can go do it again for someone else and potentially get another down payment and perhaps property value increase and now you can owner finance the note at 115k for the purchase price. With that being said you should still properly qualify your buyer and make sure they can make the payments and will not be living check to check (that is IMMORAL). There are also some recent SAFE and Dodd Frank laws that limit the number of these you can do in a rolling 12 months so to my understanding a lot of investors are stepping back from this method because it is not quite as advantageous but still PROFITABLE!

Hope this helps and if any part of this is incorrect for you pro-investors out there please let me know and I will certainly revise- I am in Texas and that is my understanding here!

Regards,

Jake

My first investment was my primary residence in which I house hacked last year. After being a renter for 3 years prio to that and spending tens of thousands of dollars in rents for nothing, I eventually caught a clue and made my first purchase and bought my house for 240k with no money down on a USDA loan.

Benefits:

1. I was able to buy a 240k home with minimal out of pocket  cost (less than 10k)
2. I was able to rent out 3 out of the 4 rooms for $600/m for each room which pays for my mortgage and puts a little cash in my pocket each month.

3. House hacking has allowed me to live almost "free" while paying down a mortgage in my name

4. While I have lived here I have been able to add sweat equity and round up my buddies for some "free" labor (usually pizza and beer is the cost)

5. I was able to negotiate a Kubota 0 turn (8k value) and a giant gun safe to be part of the purchase (2-3k)

Cons:

1. I purchased at what the home appraised for with no money down - this is also a negative because it is a horrible equity position.

2. It truly could have been a better investment if I had found a cheaper home and put a down payment to minimize my monthly note.

3. After putting about 20k back into the property it has not appreciated quite to where I would have liked it to or thought it would.

If I had to do it again:

I would still house hack and I may even do it on my next primary residence in a duplex/triplex/four-plex. You seriously cannot beat living for damn near free when you are getting started! Being able to stack my cash while my mortgage is paid down has been a huge plus but if I had to redo it then I would have bought a cheaper property and put at least a small amount down to help get the monthly note down. I also would not sink too much money in the property where you will never get it back out. I definitely do not regret the purchase as it has worked out fine but there are a few tweaks that I could have paid attention to before jumping to purchase.

@Case Collett are you only interested in Austin or would you be comfortable in a different market? ie: Houston, Dallas, San Antonio.

Hello everyone, I wanted to see if anyone has run into the same scenario. I just purchased my first flip with a hard money loan and now most of my capital will be tied up into that property. However, I have had yet another great flip come up but now my capital is all tied up for the next few months and I basically need another 10k to secure another hardmoney on the second home. Any advice on raising the capital... Personal loan or some sort of line of credit? I have really good credit but I don't particularly want to wholesale this second deal.

Hello BP!

I am relatively new to the forums here and am posting up to make some new connections. I currently live in Houston, TX and will be placing most of my marketing efforts here locally. On top of that, I will be venturing into the San Antonio, Dallas, Austin, and El Paso markets as well. I am currently looking for Real Estate agents who would be interested in listings as well as investors looking for good off-market deals. Since testing our marketing I found I come across a variety of leads not just for investors but also good listings for agents. If you or someone you know might be interested in working together please reach out to me here! 

Regards, 

I would suggest just get educated first- BP has some AWESOME forums and podcasts about Wholesaling and how you can get started. I am not in the Austin market yet but I know it is very competitive if you have any questions definitely post them up! 

Welcome Craig! So much awesome info on BP regardless of your strategy!

Hello Everyone! I am new to the bigger pockets forums and I am new to RE Investing less than 6 months. I current live in Houston, Tx and will be marketing for true off market leads in Dallas, Austin, San Antonio, Houston, and El Paso because I am just getting started I will be going from City to City with my marketing efforts and I am looking to set up a team in the aforementioned markets. I am already set up in Houston but would be happy to connect with more investors and agents. I am currently going to be wholesaling until I can get enough capital accrued so I can began my own journey. If anyone here is an investor in the above markets or even an agent looking for listings please reach out to me as we always end up with both investor and agent deals. I would love to connect and see how we can serve each other .

Regards,

Jake