All Forum Posts by: Jeremy Dockendorf

@Dennis M. appreciate the insight. A valid concern I should be weighing. 

@Caleb Heimsoth @Dennis M.

Do you both say that because of the risk of the property value decreasing in 5 years to where I may not have enough equity to refi without paying down?

(*the seller is 77 years old and said he won’t finance for more than 5 years)

 @Steve Hall

I’ll respond to your points in reverse order because it’ll make more sense to our situation. 

4) In my own naivety I thought we could get a discount if he stood to make as much or more by financing it himself.

3) We are willing to pay 5% because of the assumed discount, smaller down, and no mortgage insurance.

2) True, but we thought there would be an advantage by avoiding mortgage insurance and having a smaller monthly payment.

1) Yes, we can qualify today. That isn't a concern. We've spoken with a couple lenders already and I know our DTI with this purchase would be in line. I'm not assuming rates will be lower, my assumption was based on my answer to #3 above.

I realize we aren’t the only potential buyers out there. And he probably won’t go down to 650. He’s already told us he’d do 740 (in addition to the seller financing). One challenge we’re hitting is that it is a 50 acre property and finding a jumbo loan for that acreage isn’t easy. Not that I’m not willing to look, but this all contributes to why I posed my original question. To see if there is an advantage to doing seller financing. 

@Tom Aiello

The property is listed at $790k and we’re trying to get it for $650k or less. So the $75k would be 11.5% if we get it for that price. I think if push came to shove we would look at private lending from family for the remodel before subdividing and selling. 

@Jay Hinrichs that’s a GREAT idea! Thank you for the awesome input. The seller has been really accommodating and I think your angle might work with him. 

@Steve Hall 

The seller financing appeals to us because it would allow us to purchase with less than the 20% down of a traditional mortgage. We also think we can get a better price if he stands to earn interest. (The property is listed at $790k)

It was actually the seller’s idea, not ours. He is an older guy, very well off, that moved out and has been trying to sell it for a year. He is emotionally attached to this farm - but admits he doesn’t need the money - and he wants us to buy it (he is really looking for a family to move in and keep horses there). 

@Tom Aiello The boarding business is really quite small. Only 10 horses. It’ll maybe generate a Net of $1000/mo. We’re just looking at it as an opportunity for my wife to do something she loves at home instead of paying to board our horses somewhere else. It isn’t near profitable when factoring in the mortgage and taxes and such. Not sure it would interest a partner. 

If you’ve got any ideas on how to make this seller financing work, please share. :)

My wife and I are looking at purchasing a large horse property for our next home. It’s not intended to be a cash flowing investment, but it will generate a little revenue as an equine boarding facility. We are working directly with the seller and he has offered to finance it. 

The seller said he would carry the 30 yr. mortgage at 5% with a balloon payment due in 5 years. He would want $100k down payment. We think we can get about $120k in proceeds from selling our current home. BUT the house needs about $45k in remodel to meet our needs. Any ideas on how to creatively finance that remodel into the deal or otherwise? Do we need to just try to convince the seller to take $75k down and pay cash for the remodel?

Appreciate any help!

@Jinkai Gao your misunderstanding is likely because you put your emphasis on the wrong thing. It’s not a matter of using a loan vs. not using a loan. It’s a matter of doing a cash out refi vs. a traditional refi. When you don't take cash out with the refinance - you're just refinancing with a different lender. (This is typically done for a better rate or term). So your new bank will just pay off the loan to your "LLC bank" and you have a new mortgage with your new bank. Then you can take the repayment funds out of your "LLC Bank" and use them to buy your next deal - essentially cashing out. Make sense?