All Forum Posts by: John K.

Asking a seller to tell you how much they want, will create some push back. You are essentially asking them to negotiate with themselves. Why would anyone do that?

There is nothing wrong with making a "NOW" offer because it is what it is, an offer that is valid now, not 3 months from now. Once you get confident in your ability to ask the right questions regarding the properties condition, there is little reason to look at a home prior to making an offer. If the offer is accepted, it's understood that it is subject to the inspection. 

If you think about it, this is not all that different from how a bank operates. They will carry a note for you, subject to inspection and appraisal. 

Your time is far too valuable to just looking at homes, for the sake of looking at homes. Concentrate on getting the answers you need on the phone, rather than in person. You only need to see the house, to confirm. 

You will want to 1st reach out to an attorney with knowledge in these types of transactions, so that you are in 100% compliance, at the state level. Most likely they can refer you to a loan servicer to assist you there.

As far as your existing mortgage. Most likely your lender will tell you that they could initiate a due on sale clause, that most likely exists. I'm not going to tell you if they will or not, as it's entirely up to them. 

I will simply tell you this. Having done several of these myself, it has never happened or even been threatened. Furthermore, having learned from someone that has had his hand in a few thousand of these, he can count on one hand how many times it's even been threatened, but never carried out. 

The reason is simple. The bank will need to make a decision on taking a performing note and potentially making it a non-performing note, with that trigger. Then there is all the costs associated with pulling that note back. The risks involved in leaving a home vacant. Then, packaging that note up and selling it for a reduced interest rate, most likely. Would not be the wisest of business decisions, on their part. With all that being said, I do realize we are talking about banks, so who really knows. 

I would discuss all the possibilities with an attorney and see where your comfort level lies, after that discussion. 

You will want to consult with an attorney in your area, that is familiar with this strategy to draft you the necessary paperwork to comply with local laws. 

I can give you a breakdown of most of my owner financed deals, so you can run some rough math.

8-10% down. I never accept less than 8% and I rarely accept more than 10% down. I want the interest, not the cash. It is much more valuable. 

FICO scores no higher than 625. This strategy is 95% about the interest, you don't want anyone getting the idea to refinance in 2 years. 

Interest Rates 9-9.9% 

Terms no longer than 12 years. I am not a bank and have no desire to be one. 

As far as qualifying the buyer. I use an RMLO that qualifies my buyers and prepares and executes all the legal paperwork required to do financing deals. My requirements are 3:1 income to payment Min. 3 mos cash reserves No job jumping. 

Though I have not had to take a property back yet, I am not all that concerned about it, if I do. I have substantial money down to more than pay for the legal proceedings and fix most damage. This is the complete opposite of the so called "security deposit" that offers no security, to anyone. 

Congratulations on your potential deal.

You won't need a realtor in this deal. The truth of the matter is, many of them would have no clue how to negotiate it or write it up. Definitely do no lean on a realtor for anything legal, regarding sub 2. You want an attorney that is knowledgable on the laws of your state. They will draft the necessary paperwork and ensure it complies with state laws.

As far as negotiating it. You need to be knowledgable on the process and what takes place. Chances are the seller is not going to have a clue. If you can't speak intelligently on the subject, bring someone that can or you will lose the seller. You need to be able to gain the trust with the seller quickly, as these transactions can seem overwhelming to a person with little to no knowledge. 

You need to understand the frontside mortgage, before you know if you have a deal or not. What are the in place terms? Is she late, if so what is the cost to make it whole again? I would get a full understanding of the terms, before I worried about inspections and such. It's not as if you can negotiate her mortgage down. 

Before you so readily take a loss, consider other options.

1. If you are not motivated by CASH, then owner finance and it and immediately fix the cash flow issue. You can carry it for 10-15 years, get a substantial down payment, eliminate your maintenance expenses and taxes. 

2. If it's in the right market that is appreciating at least 7% per year, hold it for 10 years and then sell it. 

200K Today Value = 393K value in 10 years @ 7% appreciation.

$150 * 120 months = $18,000 Loss. 

Who wouldn't cut a check right now for 18K, to receive $175K net (give or take) in 10 years?

This is actually a strategy used on A & B neighborhoods, when they are typically priced out of becoming rentals. This only works if that neighborhood has a strong history of maintaining its appreciation. Do not do this on a roller coaster neighborhood. 

Clearly if your market is over saturated, this might not be a viable option. You will need to do some homework and make sure that it can be sold, within a reasonable amount of time. 

Either way, explore other options before you just presume a loss is the only way. There are better ways to make a property perform, than renting. 

The will is usually recorded in the deceased name, so I would search for that. If it's a fairly common name, you will have to confirm that with by any known assets of the estate. Hopefully, if a will is present, the assets are listed.

I would not put any stock into an obituary, especially if it's just a formal notification and not one taken out by a family member. The information won't be complete, when it's just a formal notification. When it comes to data sites, never put your trust in just one. None of them are 100% accurate, so you need access to 2 or 3. I use fastpeoplesearch and have very few complaints.

I would dig in deep and start doing some PI work.

1. Search Recorder of Deeds (your equivalent) for any documents ever recorded for that property, for any reason. Look for different names and addresses and search them.

2. If that county/city has an open record policy, request any and all documents pertaining to that property, over "X" number of months/years. Look for different names and addresses, that you may not have.

While it's not unheard of that a generation line is stopped, it's rare. If you can't locate children, then go wide and try to find siblings or their children. Find family members of her spouse/ex. Someone out there knew her and can put you in contact with a family member. It really comes down to how hard do you want to dig in, versus hiring an actual PI to do it for you. 

1. Look into county records for a will that may be recorded, identifying the relatives or the executor of the estate. 

2. If there is no will, which is probably going to be the case, then start contacting the blood line. They may not be aware that this property is likely theirs now, otherwise it would have been sold already. 

Good Luck

I would visit the multiple freelancer sites and perform interviews. 

You will go through a few before you find a quality one, but at $4-6 Hour, it's worth the frustration. 

It took me 7 applicant's, before I found my rock star. 

@Gina DiMasi

You are most welcome.

I am old school when it comes to reaching out. I prefer the phone, 100% of the time. I feel these are the types of conversations that need a professional approach, from the very beginning.

The issue I have with letters/cards, is I don't have a lot of information that will help me during that conversation. I can't negotiate or even begin to get to that point, without some knowledge to help me find those pain points. It leaves me with 2 options. 1. Create an interrogation and keep asking questions, hoping they don't hang up or get tired of it. 2. Try to pay attention to them talking, while looking up data and undoubtedly getting caught doing it or worse, miss some very important information that they offered. 

When I make a direct call, I have loads of data that I am staring at. I can take that conversation anywhere I feel it needs to go, to get that deal done. 

I am always looking to try and get deals under seller financing, rather than outright purchases. 

Most recently I have done 3 SFR deals on seller financing and one very large portfolio of 123 SFR, on seller financing.

The tactics I use always vary, because I try to identify pain points that I can make seller financing sound like a great solution to that problem. I remind them that selling on the market, will cost them at least 10%, versus 0% for my offer. I remind that my offer will exceed market value, after factoring in interest. If they are not cash motivated, it is very hard to argue with that logic. 

If they come at me with concerns over payments being made in a timely manner, or at all.

My statement is as follows:

1. I am an investor, therefore my entire motivation is to make money. It would make zero sense for me to enter into this deal pay for a couple of months and then stop. The few months of free payments I would receive, would not help me achieve my goals. You would simply foreclose and I would lose everything. 

The biggest hurdles for me, have always been just a lack of them understanding the process in general. I remind them that the transaction will be completed at a title company, thus having an unbiased 3rd party reviewing all documents, to ensure compliance with the laws of Texas. I have even told one couple to speak to an attorney of their choice, if they charge you, I'll reimburse you that fee.