All Forum Posts by: Kelly P.

Reaching out again to ask for ideas on how to structure an offer for seller financing.

Here's the specs:
Investor owns 2 SFR and both are for sale on Zillow at around $300K each
Both properties are tenant occupied (no mention if seller will remove tenants) and they won't allow walk thru without an approved offer
No loans on the properties and owned for at least 20 years
Both properties need rehab (roofs are newer but doubt anything inside has been touched) and are nearly 100 years old each
Opportunity is to short term rent both (that's my jam)

My finances: W2 income, 800+ credit score, not highly liquid (equity in other properties), Airbnb positive cashflow 3 properties (experience). I could pay "all cash" if I can take out IRA $$ then get it back into my account within the 90 day window.

My goal: acquire both properties, rehab, then Airbnb.

What are the seller financing options I might propose that would:
Get the property with tenants out
Get owner financing for first 12-24 months 
Reduce cash out of pocket upfront and/or when I take out the owner financing with a loan

Thanks for any suggestions on how to structure a seller finance offer! Kelly

@Spencer Cornelia @Steve Vaughan

Hi guys! You were so helpful before so I'm reaching out again to ask for ideas on how to structure an offer for seller financing. 
Here's the specs:
Investor owns 2 SFR and both are for sale on Zillow at around $300K each
Both properties are tenant occupied (no mention if seller will remove tenants) and they won't allow walk thru without an approved offer
No loans on the properties and owned for at least 20 years
Both properties need rehab (roofs are newer but doubt anything inside has been touched) and are nearly 100 years old each
Opportunity is the short term rent both (that's my jam)

My finances: W2 income, 800+ credit score, not highly liquid (equity in other properties), Airbnb positive cashflow 3 properties (experience). I could pay "all cash" if I can take out IRA $$ then get it back into my account within the 90 day window.

My goal: acquire both properties, rehab, then Airbnb.  BUT... need to reduce cash out of pocket. Assume each property needs around $100K to be overhauled and Airbnb ready.  Ideally take out with a loan once rehabbed based on rehab value (I need to understand what the market would bear for rehab value - probably not a huge increase once rehabbed - value is in the Airbnb income).  

Thanks for any suggestions on how to structure a seller finance offer!  Kelly

I have a short term rental property in Savannah that has a STVR (short term vacation rental) certificate.  When I was looking for properties in 2018, I found a house for sale on Zillow that the real estate agent neglected to indicate had a STVR certificate in the listing.  I figured out the house did have a STVR permit by looking up the property address on a Savannah city map that indicates which properties have a certificate (link to the map here).

Having that certificate was a huge asset that the agent overlooked when selling the property.  I did my homework and got a great deal unbeknownst to the agent. 

Since then, I've spent hours trolling Zillow and comparing listings to the Savannah STVR map to see which properties for sale may have a certificate that the agent has neglected to communicate. Very rare to find this good luck again. 

An alt way to get a certificate is to make the home your primary residence, then the home qualifies for a certificate.  But, beware. The City of Savannah is not playing games and there is a high likelihood you could get busted since they've hired more investigators and there are Savannah citizens dying to out any homeowners not following the rules.  

Regarding condos: make sure the HOA allows short term rentals and that the rules won't change. Some condos downtown are approved for short term rentals by the city and don't need a permit.

Finally - if you use the Savannah city map to look up property address to see if they have a STVR certificate, be sure to double check with the agent or even the city before you buy a property that shows it has a STVR certificate on the map. The city map website does not differentiate between an STVR certificate being a "homestead" certificate (your primary residence) or a non-homestead certificate.  The STVR homestead certificates cannot be turned into a "non-homestead" certificate.  If you don't plan to live in the house, then the STVR homestead certificate does you no good.  You'll have to "wait in line" for a certificate to become available in the district in which your property is located.  Like the previous poster said, the city literally cannot tell you how long it will take to wait for a certificate.  They've had people on the lists for years and nobody is giving up their certificates so the wait list is sort of "fake news." Good luck all!  

@Spencer Cornelia and @Steve Vaughan

Thanks so much guys! This is so helpful.  I'll keep you updated as I apply your ideas.  

@Spencer Cornelia

Hey Spencer! Thanks so much for taking the time to propose the solutions above.  How does Option 2 work for taking over the payments?  Are loans transferable? Do I pay the owner or the bank? What type of legal doc do I need to protect my interest and investment?  If it is too laborious to answer, I totally understand! I'm sure there are so many variations on what you're proposing. Thanks in advance. Understanding this alternative financing is my last hurdle. 

@Tom S. Thanks, Tom. I've got cash and or access to HELOC for which I'm grateful. I think I've learned that you cannot combine owner financing with conventional financing. I'm getting too greedy or creative I suppose! I appreciate the feedback from everyone.

Thank you, Joe! I was naive hoping the bank wouldn't see that side of the transaction.  

How do I structure the offer asking seller to finance the down payment?  

I qualified for a mortgage (excellent credit; solid W2 income), but don't want to use my own money for down on 2nd home. 

Seller has $175K mortgage (or less)

Offer full price $334,000

What is the structure of the 20% down payment financing?  (5 years, 5% non compounded, balloon, etc.)?

Do I have to ask permission from my bank? 

In case this matters: Seller also owns the other unit of the 2 unit townhouse and I'd like to buy that in the near future (I assume seller will want to sell once lease expires on 2nd unit)

@Chai Xiong I'm a control freak too! That's why it was driving me crazy when the property management company wasn't pricing how I thought it should be priced and also couldn't personalize the experience for the guests because they were managing 50+ properties. I have 99% 5 star reviews and have been a super host each quarter I've hosted... myself... long distance. Woot!

Jumping in to add positive reinforcement. I own and manage 2 STRs long distance. I initially used an experienced STR property management company but let them go when I felt that I could optimize the guest experience and my bottom line. I doubled my income year 1 (they were under pricing). I have a full time job and the STR is my side hustle so I needed to automate everything I could. Using multiple digital solutions, I've automated communications, pricing, and digital access (locks). And like @Lisa Graesser said, I rely heavily on a good cleaning crew/human and have a list of techs (plumber, electrician, HVAC, etc.) who I can call to fix things pronto. I've used Yelp a lot to create my long distance team. You can find cleaners via Properly. And the coolest thing is that Amazon Key is a new service where Amazon will deliver supplies inside your house or garage so you don't have to pay anyone to pick up supplies for you.  I love hosting and retaining my profits by doing it myself.