All Forum Posts by: Matthew Adams

Thanks for the education.  Turns out we can’t carry.  We were going to do a wraparound, but our current mortgage is not assumable.

We might sell a rental house to the tenants and carry the note.  The house currently has a first mortgage held by us (about $88k).  We're in Mississippi.

First, will we have to pay off the first mortgage in order to offer them owner financing?  We've heard of a wraparound loan & a "junior" lien.

Second, I know I can do it via a spreadsheet, but I want the convenience of an online, software-as-a-service (SaaS) tool that takes care of everything, from payments to legal reporting (1098s and such), etc.  Also, I'd rather the buyers pay a faceless mortgage-looking company than me personally.

This is our first owner finance, so need something simple and inexpensive.  Thanks in advance.

I'm looking at a 30-ish room, two-story motel on a beach in a great area.  It's been for sale for around a year or so, maybe more.  The owner doesn't have the bandwidth to finish the renovation and has put it up for sale as-is, asking $2.5 million.  It's been gutted to the studs inside, has a new roof, and has a pool (needs work plus a possible expansion), with room for new commercial buildings to replace the ones that were demolished or for an expansion of the motel with either more rooms or a few condos for short-term rental.

I'm considering selling a single-family home that I own outright in another state (Lake Havasu City, AZ) to finance this deal.  It's worth around $450k & I'm not sure how long it'll take to sell in the current market.

Our immediate family (my wife, her dad, out daughter & I) are very handy and have experience in construction, HVAC, electrical, plumbing, etc, so we are anticipating being the general contractor and subbing out only those things we cannot do ourselves.

We have several STRs, but no motels.  This place has great potential to be renovated into a unique, boutique motel.

How do I go about forecasting financials and exploring funding?  I'm a software developer and very good with a spreadsheet and all, but I'm wondering if I could secure an experienced lender who not only can lend, but also provide advice on a deal like this from having financed similar situations before.

Pointers to financial calculators for such an endevour and hotel/motel renovation-style lenders & contacts appreciated.

Thanks,
Matthew

Hi,

I just read through the article at https://www.biggerpockets.com/blog/how-im-using-helocs-to-build-wealth by Charles Hardage.  I'm unclear on one thing, though. Charles said:

"Our first HELOC allowed us to save $50,000 in principal off our home, which saved $30,000 in interest. We still had to pay interest on the HELOC, but that was only a few thousand dollars over the course of a year. But by using the HELOC, we saved about seven years of mortgage payments on the back end."

So, Charles is saying that he took out a HELOC to pay down his principal? Let's say you have a 30-yr fixed first mortage at, say, 5%, with a current principal of $200,000 after 10-ish years of payments and an original loan amount of $300,000, and you take out a $50,000 HELOC with a 5-yr draw & 20-yr repayment period at, say, 9%. In this scenario, how does that help someone save first mortgage interest and enable them to have capital to nab investment properties?  It strikes me that you're borrowing at 9% to pay down money that you're only paying 5% on, so how does that help you save interest?  Also, how much do you pay on your first mortgage versus how much you use for capital on acquiring real estate?

Appreciate some clarification here.

I was contacted by fundandgrow.com (after I submitted a request for funding through connectedinvestors.com).

Does anyone have any experience with them?  I'm still trying to understand their business & service models.

Thanks,

Matthew

Ok, so I found a local bank that has an internal private fund for the area. They were offering a $50k min, 3-yr or 5-yr ARM (can't recall total term right now) with a max 2% annual change in rate. No sacrifice of equity, I guess just a loan secured by the property as collateral. Rates were very competitive versus conventional for the first year.

If we come in with a high percentage down, we could pay off the additional required fairly quickly.  Seems like a win to me, or, at the minimum, makes it possible.

FYI state is Mississippi

Want to finance a townhouse in a complex where less than 50% of the units are owner-occupied.  Conventional lender (US Bank) will not lend, even with large down payment (>40%).

What kind of lender will?

@Evan Polaski The property's in great shape.

I have no problem continuing to be a landlord.  My goal is to use the equity to substantially increase monthly cash flow.

@Timothy Hero What's a "non-qm lender"?