All Forum Posts by: Mike Gomez

Got it. Thank you so much for the input gentlemen.... I decided to turn down the offer. 

I do however have an appt with a person willing to discuss different options to sell her home to me. I was going to start with owner / finance, and then wholesale as a plan B. I flipped her neighbors home. Any recommendations for this type of situation? When you sell to a wholesaler, how do you set up the contract to where you get paid the difference? 

Right… aside from that, do you think it’s worth the down payment vs low cash flow. 

Good evening guys, I'm in need of some help double checking my numbers..... and seeing if the investment is worth executing before its too late. Me and the owner have been negotiating and below are the terms. I also attached some info on the property. It is a triplex with full occupancy. 3bd, ba 1651 sqft. 

Sales price 200K, 20K down, 8.5% @ 30 years, first 6 months of interest only payments, and balloon payment at 3 year mark. Which would be ideal to refinance out of , given that there are no issues with that... I'm just not sure anymore if the benefits outweigh the risks. Give it to me straight guys...I feel like I've been staring at numbers all week and now i'm confusing myself. Thank you in advance. 

Quote from @Jeremy Pace:

Just at a high level, you're out of pocket $25k for about $100/month in cashflow (~1300 pmt and 300 taxes and 100 insurance per month). That's about 5% cash on cash, and there's no accounting for CapEx, deferred or otherwise. I'm not saying it's not the deal for you, but I would say it sounds very lean.
Also, the fact that there's not more detail about the current title/deed is a little unnerving.  It sounds like he has a contract for deed with the current owner, so he would at best be accepting 2nd position for his own note.

Can you add any additional clarifications?

 Hi Jeremy, thank you so much for responding. I just spoke with him and apparently the original owner passed away several years ago and placed all his properties into a trust. So this seller just makes payments to the trust. He was planning on using my downpayment to get caught up with taxes. He does not have title on hand but would receive it once he's all paid up. I guess that good news is that the trust is being managed by an attorney and that makes it a little more trust worthy than dealing with another person. 

Quote from @Nathan Gesner:

Quote from @Mike Gomez:

First, it's hard to tell you if it's a good deal because you don't share the numbers. What is the payment with taxes and insurance? What will the property rent for? I recommend you learn how to analyze the deal to determine whether it's a solid investment, regardless of financing.

Second, I wouldn't touch this deal because he still carries a mortgage and he sounds financially irresponsible. There's risk of foreclosure if he fails to pay his mortgage to the original owner. You pay him, he pockets the cash and doesn't pay his mortgage, the original owner forecloses, and you lose everything even though you've made every payment.

Thank you for replying Nathan, I always try to do my research before-hand. However, this one was one of those spur of the moment type deals so I haven't had a chance to look into taxes and insurance. Luckily my parents live across the street so I know the neighborhood is good and I believe my parents taxes were $3800 which is a comparable in square footage and rooms. I tried to jump in this deal because of the area that its in, I know its rentable for $1800-2200 with cosmetic updates. 


What would your recommendations be in order to make this a "safe" option? Contact the original owner? 

Quote from @Chris Seveney:

@Mike Gomez

So the current owner owns it, financing it via land contract to your neighbor who wants to sell it to you

First check with the current owner as most land contracts are not assignable. He could sell it to pay off the current owner but may not be able to assign it. You will want it assigned to you otherwise this could get very problematic down the road.

That is where I would start and if it doesn’t rent for 1800-2000 a month then it’s not a deal.

Thank you, I haven't learned about land contracts yet. I'll reach out to him now. I definitely believe there would be no issues renting out for minimum $1800/month even with just minor cosmetic updates. I'm aiming for $2200 because Its a really good established neighborhood and the house is a 4bd/2.5ba. 

Quote from @Account Closed:

Quote from @Mike Gomez:

Hello BP fam, I'm in need of some guidance. This is my first time looking into a owner finance and I'm trying to figure out if it's a smart move and what else it would entail to ensure a good deal...

A neighbor across my parents is willing to owner finance his home to me to turn into a rental property. He is currently owner financing it himself and owes $70K. The home is appraised at $275, but does need some cosmetics. Does have a new A/C and roof. He also disclosed that he's behind on his taxes and would need a down payment in order to pay off the back taxes.. I would be purchasing for $240K, with 15K down at closing, and additional $5k annually for first 2 years so I would finance $215K over 30 yrs at 6%. My Payments are $1289 not including taxes or insurance. 

deal or no deal guys? Thanks again

If so, do I ask for title in hand? He said the original owner still has it. And how do i know the payments are indeed going to my loan how do i keep track of this without having to take someone's word. I'm worried that if i try to pay it off quicker, we wont really know what's going to principal etc... sorry i know it's a lot ha but i have so many questions and he's wanting to make a move. Thank you thank you

It sounds like he is buying it on land contract and he won't get the actual title until his loan is paid off. You would end up doing a Wrap on his sale (which would be in seconded position to the land contract). Is it doable, yes. Do you need to know what you are doing before you commit to something like this, absolutely yes.

By the way, what's with the needle in your profile?

 Okay, i'm glad to hear that its still doable. I always do my homework before jumping into a new type of deal, but this one just kinda presented itself one weekend. The seller is currently liquidated and was negating with a person who flips homes. I luckily convinced him to do a owner finance without knowing much about it ha. 

And the needle is my main bread n' butter. 

Hello BP fam, I'm in need of some guidance. This is my first time looking into a owner finance and I'm trying to figure out if it's a smart move and what else it would entail to ensure a good deal...

A neighbor across my parents is willing to owner finance his home to me to turn into a rental property. He is currently owner financing it himself and owes $70K. The home is appraised at $275, but does need some cosmetics. Does have a new A/C and roof. He also disclosed that he's behind on his taxes and would need a down payment in order to pay off the back taxes.. I would be purchasing for $240K, with 15K down at closing, and additional $5k annually for first 2 years so I would finance $215K over 30 yrs at 6%. My Payments are $1289 not including taxes or insurance. 

deal or no deal guys? Thanks again

If so, do I ask for title in hand? He said the original owner still has it. And how do i know the payments are indeed going to my loan how do i keep track of this without having to take someone's word. I'm worried that if i try to pay it off quicker, we wont really know what's going to principal etc... sorry i know it's a lot ha but i have so many questions and he's wanting to make a move. Thank you thank you

Hello BP fam, I'm in need of some guidance. This is my first time looking into a owner finance and I'm trying to figure out if it's a smart move and what else it would entail to ensure a good deal...

A neighbor across my parents is willing to owner finance his home to me to turn into a rental property. He is currently owner financing it himself and owes $70K. The home is appraised at $275, but does need some cosmetics. Does have a new A/C and roof. He also disclosed that he's behind on his taxes and would need a down payment in order to pay off the back taxes.. I would be purchasing for $240K, with 15K down at closing, and additional $5k annually for first 2 years so I would finance $215K over 30 yrs at 6%. My Payments are $1289 not including taxes or insurance.

deal or no deal guys? Thanks again

If so, do I ask for title in hand? He said the original owner still has it. And how do i know the payments are indeed going to my loan how do i keep track of this without having to take someone's word. I'm worried that if i try to pay it off quicker, we wont really know what's going to principal etc... sorry i know it's a lot ha but i have so many questions and he's wanting to make a move. Thank you thank you

Wow... Thank you guys for all the information. It is greatly appreciated. Sounds like I should steer clear of new builds for now. Thank you all again.