All Forum Posts by: James Allen

Hey BP,

Trying to wrap my head around this Owner Financing Fix and flip deal. I've never looked into to doing owner financing with a flip before. I have a few questions that maybe you guys can help me out with. 

1. What are typical lengths of deals done with owner financing with intent to flip. (ex. 12 month, 18 month, 3 year w/ balloon payment, etc.)  ??

2. Typically, If I were to pull this flip off in 6 months with a 18 month loan w/ balloon payment, will I be able to pay off the remainder of the loan after 6 months penalty free or do I have to make those payments for the whole 18 months no matter what? 

3. Is it typical to let the seller know your plans are to flip the property? 

4. In this deal, we're both using the same RE Agent. Does the agent draft the paperwork or would an attorney be more appropriate in this case? 

5. Is it important to make sure they have 100% equity to avoid wrap around mortgage complications such as potential due on sales clause, etc.? 

Thanks in advance!

Hey BP,

Does anyone have any recommendations for General Contractors in the Deltona or Orlando area? Looking to have a GC help us with our fix and flips in the area. 

@Elizabeth Wilson - Would love to! Unfortunately our flight leaves that day at 7:30 AM. We'd love to meet up though if you're up for it on Monday or Tuesday. We could take you out for lunch maybe pick your brain a little about Memphis. Let me know. :) 

@Justin Stamper - Awesome! I just sent you a colleague request. 

Hey BP,

My brother and I are part time RE Investors looking to expand our investing to Memphis, TN. We're looking to meet up with a Memphis RE Agent on Monday June 26th or Tuesday June 27th. My brother and I will be flying in to check out the area and we are interested in doing some flips there. Please let me know if you are free to meet up or if you have any recommendations.

Thanks,

James

@Rainiel De La Nuez - Thank you for the info, that's very helpful! @Joshua Dates - Sounds Good, let's connect. @Chris Grenier - Thx

Hey BP, 

My brother and I are part time RE Investors looking to expand our investing to Deltona, FL. We're looking to meet up with a Deltona RE Agent next Wednesday afternoon or Thursday morning. My brother and I will be flying in to check out the area and we are interested in doing some flips there. Please let me know if you are free to meet up or if you have any recommendations. 

Thanks,

James

@Kevin Douglas - It could be that its  an area that is high on crime. Those areas in particular will cash flow better however, will be a nightmare to manage. To be fair,  I don't know which area you invest in so I could be wrong.  How familiar are you with your farm area?  Is this your first investment property? if so, you will need to decide what you're willing to deal with as an investor.  Personally, if it was me, I would stay far away from dealing with difficult tenants but that's just my take. 

@Kevin Douglas - I have a section 8 tenant. The one I inherited had been there 23 years prior to my purchase of the property and had no trouble paying on time so for me, my section 8 tenant has been great. I have however also heard nightmare stories about section 8 tenants. 

Firstly, I'm assuming this is a property on the MLS. Do you have this deal already under contract/in escrow? If not, you might find there could be a lot of competition for this house already if the numbers really are what you say. It would be a mistake to pass on the opportunity without giving it a chance. (Further explanation below)

Secondly, If numbers make sense, I would put an offer in to secure the property and during your due diligence, I would suggest doing more research about your potential tenant in addition to your inspection. Verify how long the tenant has been there, ask for the updated lease agreement to make sure it is $950 a month, Check original lease agreement with security deposit info, Acquire Rent Rolls to make sure they have been paying. This should be a good place to start with your due diligence. 

Lastly, don't forget when calculating cash flow, aside from taxes, insurance, and maintenance, to include budget for Cap ex, Vacancy, Misc. Fees (Lawyers, Evictions, random expenses),  Property Management, and also check if your property falls in a flood zone! Lenders will require flood insurance if it does fall in one which depending on your property's level of risk, could be a cash flow killer. Again, you could still assess things like Flood zones during due diligence but it's not hard to pick up the phone and call your insurance agent for that. 

Good Luck! 

- James

Alright so I checked with my lender and another lender as well and they both confirmed the same things mentioned in this post. To house hack with an FHA loan you will in fact need to establish residency and acquire a job in the state you are looking to house hack in unless you can get it in writing from your current job that you are able to work remotely from your state of choice. Obviously the hassle-free way around this if you really wanted to cut down your expenses for rent would be to put down 20-25% on the property. Then they could care less if you live in that state or not since they would treat it like an investment property purchase. At that point though, if your living expenses are fine by your standards, you could just rent out all the units.