All Forum Posts by: Jason Pachomski

After talking to some people both on here and off, I'm wondering if there would be any incentive for me to buy it on a lease option. The benefits for the seller would be the continuation and increase in monthly cashflow (current rent + option fee) as well as not having to handle any repairs that come up. To @Account Closed 's point -- you maybe be right though... I don't know if there's any scenario that would be attractive enough to a seller who's holding all the cards (pretty house in a seller's market with no pressure on their end to sell quickly). I'm also not even sure what my strategy could be after I buy it with a lease option...

@Brian P. @Isaac Guzman 

 I totally agree. I'm not lookin to do anyone dirty. I literally have no experience in this area (or many other areas for that matter) so I definitely appreciate all the input. I spoke with my mentor here in LA and she kind of had the same opinion. There isn't much of an incentive for the seller to do anything except list it and sell it. They're not in any hurry to sell, and they want top dollar for it. I was thinking when I call them next (tomorrow) I could explain the concept of a lease option and see if they show any interest (at least it'd save them the realtor commission) but otherwise I think they'll be a follow-up. See if the house doesn't sell and then contact them again. In the meantime, I was gonna offer to be their "man on the ground" here in LA being that they're so far away. No idea what they could use me for but ya never know...

@Travis Foster I don't currently have a buyer but I don't foresee having any difficulty in finding one the way the market is in LA right now. 

@Eldar M. Hello fellow Valley dweller! Yeah the owners haven't decided on an asking price yet and they're actually planning on getting it appraised before they list it. If I can convince them to "be the bank" I can realistically offer them whatever it appraises for though right? 

Thanks Issac! Yeah I've heard that discussed before as well (on the BP podcast as a matter of fact). I don't think it would be unethical to also qualify to the seller that the bank calling it due rarely ever happens (from what I've heard). It makes sense that they wouldn't too right? I mean, they call it due and they'd be losing out on 26 more years of interest payments...

I've never done an owner financing deal, so I'm wondering if anyone here could look at the situation and let me know what they think. It could be I'm completely wrong and that another exit strategy is even better....

The lowdown: I'm in Los Angeles, where the property is located. Single family home. Owners live out of state (in WA). They bought the place for their daughter to live in while she was here in college (must be nice!) and she's since graduated. They have a family friend in the property now as a tenant.

They're looking to sell but are not distressed at all. Not in arrears. Never been late. Tenant is also current on rent. They plan to list it and just leave it up on the market until it sells, which, around here, would happen very quickly due to shortage of inventory.

I estimate the ARV at $527K. House is in excellent shape and needs, at most, interior paint. Owners owe $200K on a conventional 30 year fixed at 5.5%. No prepayment penalty.

My question is this: is there ANY option I can present to them that would be better for them then listing it and selling it the old fashioned way? 

Here are my thoughts... would love to see what you guys think and if I'm completely off-base: 

Seeing as they're under no pressure to sell, they're obviously not going to accept a cash offer (on a $550K ARV I'd normally offer about $405K cash). The owner told me explicitly that they want top dollar for the place and they're willing to wait in order to get it.

I'm thinking that I could offer then an owner financing deal that goes something like this. I give them a 10% down payment towards the $527K and they finance the rest to me under the current terms of their mortgage. I'll then turn around and sell it (or lease option it?) to someone else whom I'll qualify -- someone who is just under the bar of being able to get a conventional loan but is still someone who can pay the bills. I get a 20% down payment from my buyer (covering the 10% I put down and keeping 10% for myself) and finance to them at, say, 8%. So what I end up with is $52K in my pocket and a monthly cashflow in the difference between the 5.5% I'm paying and the 8% i'm charging my buyer.

NOW, assuming that this clusterf*** of a transaction that I just described is even feasible, my next, and more important question is, what can I tell the current owners that will show them that this option is better than just listing it and selling it the old fashioned way? Again, my thouhgts that I'd love feedback on: (1) they no longer have to pay property taxes, but they still are collecting a check every month for MORE THAN their mortgage payment (cashflow for them every month). (2) They avoid having to pay upwards of 24% in taxes on the lump sum they'll receive by selling with an agent. (3) They'll avoid having to pay the realtor's commission.

Thanks in advance for anyone who actually read this whole thing. I would really REALLY appreciate anyone who has any input.

Good luck Carlos! I wish that strategy worked here in Los Angeles haha

Thanks Tapan! I'll definitely check out Pete Fortunado's stuff. As far as building rapport on that first call... I guess it's a just a matter of having a conversation and not diving right into "SELL ME YOUR HOUSE!" right?

I suppose it'll also help once I stop being scared sh**less of making sales calls on the phone haha

Hey everyone,

I've started a yellow letter campaign mailing to a list of absentee owners in my area. I've started to get some responses and I wanted to ask anyone who's gotten deals or has at least dealt with absentee owners as it pertains to that first call. 

I'm not looking for a script, but maybe some pointers... I'm guessing that a lot of these people are going to be investors themselves and as such are a little more savvy than the common homeowner. I can get on the phone and tell them I was looking at properties in their area and that I was wondering if they're interested in selling. Then what? Do I come right out at some natural point in the conversation and let them know I too am an investor? My goal is to collect the right information so that I can go do my research and then (with the help of my mentor) decide if there's a deal there at all. 

Pretty broad, I know. Guess I'm just looking for some general insight. If you hadn't already guessed, I'm fairly new to the game and I can already tell that my BIGGEST hurdle is going to be dealing with people on the phone and handling objections. A pretty commonplace hurdle, I'm sure, but I gotta get over it if I'm gonna make any money.

Thanks in advance!

I've just recently taken a small ($5k) loan out of my 401k and I'm not incurring any penalties. I didn't use it for a down payment on a property so I can't speak to that, but the comments saying that the interest rate is low and that you're paying it back to yourself are (at least in my case) accurate.