All Forum Posts by: Michael Outar

Ashish thanks for the detailed response.

Hello all. I have a question. I moved into a smaller home and don't have a office for my real estate business.

I had a thought the other day. I wondered if I purchased a motor home and used it as my business office if the IRS would allow that as a business deduction. I would also plan to use it for family trips and such as well. I'm guessing its a no, but maybe there is a loophole I can explore. Any thoughts or advice would be appreciated.

I am purchasing a SFR with a self-directed IRA along side a non-recourse loan. Much question is this. This home has flipping potential but I will not have enough reserves in the IRA to do all the improvements. Is there any way of getting the funds to do the upgrades without making a contribution into the IRA? Is there any loopholes or possibilities of using my own money without having to make a contribution to do the improvements. Any ideas would be greatly appreciated. Thanks.

I am purchasing a multifamily home via owner financing. My local bank says they do not do equity lines of credit on investment properties. Is that true of all banks. If so. How can I take equity out of this house to purchase another investment property? Thanks. 

According to my attorney. There would have to be a statement in the permissionary note about a second lien. I guess I could always sell the property but I was thinking more from the angle of using the equity that I have accrued over the years and pulling that out to reinvest into another property. She also wants to hold the deed until payoff. Is that normal business practice. Plus she wants a 3% prepayment penalty if the note is paid off sooner then 15 year. She also wants me to pay all the closing costs. Is she asking too much or is this normal?

I am in negotiations with a owner to buy a 4 plex with owner financing. She is holding  the note for 25 years. I want to be able to place a second mortgage on the home in the future and she is saying no to that. Should I say no to this deal for that reason or do owner financing deals normally not allow for second mortgages. I basically want to be able to take equity out of this house and invest that into another property. Thanks for any advice with owner financing. 

I appreciate all the feedback. Wanted to give an update. Had a property management company give me an estimate to rent all four apartments. Also got an OK from them and a talked to the fire marshal about code. Everything looks good. Just spent $500 on a appraisal as well. So here are the terms of the owner financing. 

Appraisal value: 400,000

Price 330,000

30000 down

4% 25 years

$1580 per month mortgage 

$2300 after all expenses but managing property myself

Rental income: $3200.

All seems really good expecially with the favorable owner financing at 4% with no Ballon payment and long term.

Can anyone think of anything else that might raise a red flag or that I'm not thinking about with owner financing. This is my first deal. Don't want to get it wrong.  

Thanks for the help. 

Hello everyone. I just signed up. The reason I signed up with Bigger Pockets was to get more information about purchasing a multi-family home with Seller Financing.

I was introduced to my moms friend which is moving and wants to sell her home that has been divided up into 4 separate living areas. The house is in great shape and was built by her 40 years ago.The top floor is 3 bedrooms 2 bath with living and dining room and kitchen. The other 3 apartments are downstairs in the basement they are 1 bedrooms which are currently rented for $500 month. She lives upstairs. The reason this was so appealing to me was that she is willing to do owner financing for 25 years at  4% with 30k down. With all that I have read about owner financing it seems like a great deal for two reasons. The long term and the low interest rate. The problem I am having is determining if its worth paying a premium for the cost of the home. She wants 340K I have talked her down to her lowest of 330k. However, I haven't had a real estate agent or appraiser look at the home but from local research I am estimating the house to be worth 315k. This is based from single family house comps in the area, not a 4 plex. I talked with an appraiser friend and he said there aren't any comps in that area so it is very hard to come up with a proper value.

Bottom line: With the estimated rental income being $2500/month minus all my expenses (including maintenance and Cap Expenses) equal positive cash flow of $516 a month, but that is with myself being the property manager. I have never been a property manager. What is my time worth?

 I'm also concerned about having negative equality right from the beginning. I will be 5 years into the mortgage just getting above water if market stays the same. Is that OK as long as i have positive cash flow?? Is that enough cash flow for a 4 plex? Is owner financing really worth it if I want to do more rental investments in the future?

I appreciate the fact that I am able to just write about my questions in this forum. I would appreciate any wisdom someone could give on this problem. Thanks again.