All Forum Posts by: Joe Garramone

I own a few 2 family properties in the towns surrounding Boston, MA. I was looking into the possibility of converting them into condo's and selling each unit as an exit strategy. Does anyone have a good book they recommend that outlines all of the steps in the process? I'd like to learn more this process but having trouble finding a book or an informational article that outlines everything from a legal standpoint to the building code requirements when converting. I'll hangup and listen.

Hello Everyone,

I found an off market deal with a retiring landlord who is starting to sell off their properties. One of the packages they are offering me is two properties (5 unit and 4 unit) for 1 million dollars total. In my area this is a great deal and I do not want to pass this up. They mentioned they would be open to seller financing if interested and I have to provide my terms in the offer. I don't have a lot of cash right now so getting a conventional loan on the properties would be difficult and I'd like to avoid partnering with someone if possible. My plan with seller financing would be to only put something small like 5% down and then finance the rest through the seller. My questions are for the people who have had experience doing a deal with seller financing. 

1. In a seller financed deal is 5% or lower down payment common? I understand it all comes down to the seller accepting this but if 10% is more common and would help me get this deal I can maybe stretch to a 10% down payment.

2. How do you come up with an interest rate, in my research I found that the interest rate is normally higher than regular 30 year fixed rates but is there a general rule of thumb on how you come up with this?

3. I've read a lot about seller financing with a balloon payment after a period of time (5, 7, 10, 15 years) and that most people refinance before that to get rid of the balloon payment. In this scenario when you refinance do you go through the normal process of refinancing where a bank would look at your loan terms/house appraisal and decide if they want to take it on? Is there any difficulties in refinancing before the balloon payment that anyone has experienced or foresees? The big one I can see is if the market crashes and the appraisal value is far less it might make it hard to find a lender. 

4. If I did only do 5% down or even 10% down when I purchase the home will a lender require any additional funds when I refinance or do they only look at what I owe on the home and what the appraisal value is? I wouldn't want to run into an issue when I refinance where I would have to throw more cash down. This seems unlikely but just wanted to check all my boxes.

If anyone has any insight or experience with any of my questions I would be very grateful to hear your response. Thanks

I agree with @Alyssa Paros it will most likely benefit you more to just have the tree trimmed than to have your neighbor hate you.

Hi Victoria,

I went through this a few years ago with a single family we owned. We had a renter interested in buying our house but needed to rent first as they didn't have a high enough pre-approval with the wife between jobs to purchase the house. Our lawyer wrote a contract that read the tenant will rent for 12 months (paying us monthly rental payments), at the end of the 12 months they would need to be ready to purchase the house for the agreed upon price when initially signing this contract. We too had reservations about this process because the tenant could easily just back out and say they are not ready to purchase the house at the end of their lease so our lawyer put in the contract that the tenants would need to front $15,000 when signing the contract as a deposit on the house (which we put in an interest bearing account). This deposit would be forfeited if they decided to not purchase the house at the end of the 12 month term. This helped us feel safer in a rent to own situation where we really wanted to sell our house and this rent to own was the only option on the table. If they backed out we got to keep 15,000 extra dollars and re-list our house, if they decided to go through with the purchase we would return the deposit. We didn't end up moving forward as the buyers decided on purchasing a less expensive home but something like this might be possible for your situation.

I would advise speaking with a real estate lawyer in your area to see if they have any experience with rent to own agreements to see what kind of outside the box ideas they may have that would make you feel safer with a rent to own agreement. It sounds like your renters/buyers don't have a lot of cash so maybe they do something like pay their monthly rent and an additional 500 (or whatever) a month that goes into an interest bearing account that you keep if they back out or you return to them if they move forward with the purchase. This may help you feel safe with a rent to own and could help them save for their down payment. 

 I agree with Mike, I'm not sure the extent of the work but from what you describe it sounds like it will be more than 20k in repairs for an 8plex...

Great idea @Amber Knight I will most likely take this approach with the kidde access points in case a repairman or even my agent need to get in to the property.

@Andrew DaSilva I have thought about installing these in the past but decided against it because I didn't want the tenant to have the ability to change the password on me. Is that something that you can prevent them from doing with the keypads you utilize?

@Russell Brazil and @Nicole A. thank you very much for your replies. I will do some research on the master key system and see if its something I will implement in my properties moving forward.

Hi Everyone,

I have 7 units that I own and manage myself. This means I have 7 sets of keys for these properties along with my personal keys and vehicle keys. I like to carry the keys with me at all times in case I find myself needing to go to one of my properties for a repair etc. I bought one of those swiss army knife looking key holders but it isn't great because the keys tend to come unfolded from the case on their own. Does anyone have a useful tool to carry around keys that isn't just a standard key ring? I'd rather try keeping them with me at all times rather than just keeping a set in my car as I sometimes uber places or take public transportation and am not near my car at all times. Any advice or suggestions would be appreciated.

Thanks!