All Forum Posts by: Max Gradowitz

I'm selling one of my properties and I have been open to the idea of seller financing since interest rates have increased a lot in the last few months, so I advertised that I'd be open to that. Today I received an offer at asking price, seller financing at 0% interest, 10% down, payments amortized at 30 years, with balloon paid at 15 years.

This was definitely not the terms I was expecting, particularly the 0% interest part. I can't seem to see how these are good terms at all. Is there something I'm missing here? Is there any reason I should entertain a 0% interest seller financing with balloon paid at 15 years?

$90k (or even quite less than that) as a down payment on a conventional loan can get you a decent multifamily property  in Central California. Have you looked into the central valley?

You should contact some local commercial lenders that offer SBA 504 loans. These typically can cover assisted living. I've read that some lenders offer 10% down, but have heard of people actually getting these loans with 15%-20% down. Mission Bank and Citizens Business Bank both have locations in both of those counties and I'm pretty sure they offer these loan programs.

This is why I always have my units managed by an experienced property management company, because they've seen everything and their lease agreements address most or all of this stuff. But I'll share what my experience is to your list (I'm in a relatively conservative part of central CA):

Pool/Jacuzzi maintenance - landlord expense.

Fireplace maintenance - I havent dealt with this before honestly, but I would guess landlords typically take care of this.

Wood Flooring maintenance - what maintenance? If the tenant screws up the flooring after their lease is up, take it out of their deposit. Always have before and after pics. I don't know of any regular monthly/quarterly maintenance that floors require.

Indoor Appliances (Dishwasher, Oven, etc) - landlord expense. If the tenant doesn't fix it themselves, you'll need to fix it for the next tenants anyway.

Outdoor Appliances (AC units, Grill, Firepit, etc) - HVAC definitely landlord. Grill??? What rental property has a built in grill??? I don't even know what to say about that lol.

HVAC maintenance/inspections - HVAC is an essential part of the house, landlord expense. BUT tenants should be responsible for replacing the filter every few months, whether or not the landlord or the tenant pays for the filter. That is always specifically addressed in every lease I've seen.

Lawncare and sprinkler system maintenance - monthly gardener bill, landlord. If you put that expense on the tenant and they dont pay it, goodbye lawn, not good for you as a landlord, so just pay it. If a sprinkler blows and needs to be replaced, tenant. Super easy to do (I did this multiple times when I rented homes in my 20s).

Pluming issues (toilets, sinks, etc) - usually landlord, but it depends. Garbage disposal freezes up and just needs to be cranked, tenant.

Water heater replacements - really man???? You expect a tenant to replace a water heater on a home they might be 1 month away from moving out of once their lease is up? Is this really a question?

Electrical issues(lightbulbs, ceiling fans, etc) - this is actually a good question. light bulbs go out, definitely tenant. More complicated issues, it depends on if the tenant what the tenant is asking for.

The general idea here is that major parts of the home, like HVAC, permanently affixed appliances (some homes I've rented out have the tenants bring some of their own appliances), major electrical and plumbing, pool, etc are all part of the house that you need to maintain in order to keep the house sellable or leasable after the tenant leaves. Minor stuff like lightbulb replacement, sprinkler head replacement, stuck garbage disposal, etc are typically tenant expenses/responsibilities. Welcome to landlording, it's not cheap but in the long run it's profitable. Get a good management company with a detailed lease agreement. Good luck!

Tell me about it. I was lucky enough to snag an off market purchase here recently and that is the only way I've been able to purchase anything at or below market value in the last few months. The market is crazy here right now.

I'm not a big fan myself. I'm not saying it doesn't work, I know agents that cold call all the time and get business from that. But I just don't like doing it. But hey, do whatever works for you.

Where at in the central valley? I'm also here and have had good success with affordable multi-units here. Some people swear by out of state purchases, but I just don't like the idea of spending so much money on something I can't drive to and see (or fix stuff on myself). All my units are within an hour or two drive from where I live.

Ever consider central CA? There are some affordable markets there, and you'll be within a reasonable driving distance away from the property.

Have you looked into Central CA? There are some areas in the middle of the state that are still affordable and have cash flow potential. 

Have you considered central CA? Northern and Southern CA tends to be too expensive to cash flow, but there are some areas of central CA that cash flow. Multifamily tends to be more profitable "bang for your buck" in my experience, but of course more tenants to manage. If you are using a management company anyway (which I always recommend, it's money very well spent) multi is the best way to go in my opinion. There is no real difference in lending as long as its 4 units or less. And yes, 20% is the norm for non-owner occupied mortgages, regardless of whether it's 1 single family home or a 2-4 unit property. I've seen people talk about less than 20% down non-owner occupied loans, but I have never actually seen it offered by any reputable lenders, so plan on putting at least 20% down. That's the norm.