All Forum Posts by: John C.

You know I just remembered another reason to charge the application fee. It causes the prospect to have to put some skin in the game. To put their money where their mouth is. They are told up front that they need to have a good rental history and stable employment equal to at least three times the rent. If they are uncomfortable with this then we tell them that we probably aren't going to be a good fit . Otherwise they'll just drop applications all over town in hopes of getting through somewhere.

We do however make exceptions if someone can prove to us that they've experienced a "one time bump in the road". As long as it's not a "lifestyle choice'.

Ciera,

Bill brings up some good points. I close all owner financing deals through an attorney since I know I don't know everything. Ounce of prevention is better than a pound of cure.

You're welcome. In the Atlanta market rental demand is up so we don't have as many vacancies as we used to.

But we do have to screen harder than ever before. Whatever you do know your customer. Make sure you verify all of their information provided on the application. Make sure to get an application from every adult that will be staying in the home. Many times the professional deadbeats will just take turns paying on a rental for a while until they feel their roomate's bad rental history is distant enough then stop paying you. Rinse and repeat. It is better to let the home sit empty for months than to hand the keys over to a bad tenant.

Hi Jeanette,

Like Lynn said it really depends on what is customary for the area. Like most things in real estate in the end the market dictates. In Atlanta it's just not that common to find a washer/dryer included. Whenever the previous tenant leaves them behind we offer them to the new tenant but as-is with a slight rent bump. On the other hand we will install coin-operated machines in a common area in multifamily buildings.

So I guess what I am saying is that around here we don't see it making a big enough difference in the rent. Particularly when you throw in maintenance. You have no idea how your tenant will treat them. Like disposals and ice-makers. Too many moving parts. It's not if they will break but when.

Hi Ciera,

These are some of the reasons we offer owner financing:

1) Taxes (taxes in installment sales are paid as you go not all at once).

2) Higher price.

3) Compete in a buyers market. People are buying the terms as well as the property. Also a lot of people have some cash stowed away right now but cannot get a bank loan for a variety of reasons.

4) Higher interest rate.

5) Since it's usually just us, the seller, and the closing attorney it's a whole lot simpler. No last minute lender hoops to jump through since we are the lender.

Well if nothing else we are keeping this discussion up near the top of the front page. I've already received a couple of inquiries.

Jon: Well said. That's exactly what I meant. Thank you. Do over? :-)

These properties are all located in the metro Atlanta area. Three in solid retail areas and two in rental areas. The loan would be in 1st position and be the only debt on the property. Yes the existing lender is willing to take a substantial haircut for cash today. New LTV would be about 50%. I would of course like the rate to be as low as possible but I do realize that there is a time cost to money. Rate and terms negotiable and could be discussed in more detail after the potential lender has had a chance evaluate the specifics of the package offline. I could fund this deal via more conventional sources if I had more time. Since I don't I thought I would throw it out here and see what sort of interest it generates.

Plus I am always looking for private lenders as the money runs out much quicker than the deals in this market if you know where to find them. Such a secure investment would I believe start things off on the right foot.

Dion,

I see what you are saying and again apologize for any confusion. I don't know the note business so I do not know the terminology. I guess a better way to present this deal is to say that I am looking for a private investor to take out several short term commercial balloons directly from the lender with their own, new note/notes. Not a note broker. At a substantial discount and extremely secured both in LTV (today's value) and cash flow. Not that I would pay hard money rates but the cash flow does support that. I am the owner and the financing would be for these five properties only. If you or someone you know would be interested in underwriting this and has direct access to funding contact me offline for the details.

Spot on J. The clock is ticking and my primary source may not be able to fund in time. I've never looked for outside capital before (which is probably obvious from my original post) but I may need to give it a try. Yes I did work with your wife a while back and was quite impressed with you guys. Really top notch.

Dion: This is not a deal I'm going to go into much more detail in an open forum with a bunch of folks I don't know. Just not going to happen. This is not "pick a deal apart" hour at the local real estate meeting and is not academic. Contact me offline if sincerely interested and able to fund if it meets your criteria. Unless you are a principal or working directly with a principal we probably won't have time.

I generally let people run their own numbers for vacancy, repairs, and credit loss. All other expenses (water, trash, grounds, taxes, insurance) are already included. Say you were to decide 20% of gross rents was reasonable that leaves you with net net cash flow of just over $48,000.00/yr on $230,000.00 to cover the debt service. Seems like a good deal to me. How did you come up with 8.39%?

Sorry for the confusion. We are looking for an investor to buy the notes at a discount and provide us with the financing. There is plenty of cash flow to support a very reasonable debt service.

Hi Joel,

We have a bunch of quads so when one unit calls in a complaint we treat all four units. Found a company down the street that will do them at $20/door. This includes coming back in a couple of weeks if necessary to get the babies.

So far this "as-needed" approach has saved us money over a maintenance contract.