Hey guys, just wanted to say thanks again for all of your input and advice. We decided to cancel the deal. It was to be an out-of-state purchase, and moving my mom there would have been a big effort, and after discussing it with her more she decided she did not want to move that far away. I still wanted to buy it myself as an investment property, but with funding sources so limited I did not want to put myself into a very difficult situation with my business in order to purchase this house.
While I'm disappointed in some ways, relieved in others, I did learn a lot during this process. Definitely feel more prepared as we are actively looking for another opportunity and determined to purchase our first home this year. Truthfully I wanted to buy my first house 5-6 years ago but the market in Oregon became so insanely overheated that it was unrealistic for us. It seems to be cooling now.
Many of you posted a lot of great tips and links to resources I had not heard of before and I will be exploring these and thank you for it. If any of you are interested, I've got some key factors: time, determination, persistence, intelligence. If any of you are looking for a partnership where you would act as the lender, I am more than determined to purchase my first investment property before the end of 2019.
Thanks guys and have a great week.
@Chris M.
Also, where is your mom living now? Would this be an upgrade or downgrade??
This house would be an upgrade in terms of the house but a downgrade in terms of the area. Her landlady recently passed away and the son plans on selling the property she is currently renting and all properties in her current town are much too expensive. She's been locked into a super low rent amount for many years now.
I am feeling more and more like I do not want to work with the owner financing guy. He wants me to sign a lease to own contract for the property at a price of $11,000 higher than we agreed to pay originally. Think we will just request a 1 or 2 week delay on the closing and try to sell the vehicle as you said.
just a caution flag, when you say it just a great deal for 25k, perhaps you need to take a closer look for big hidden issues. if you can't find others in the same condition and price range, there is red flag for me.
The area that we are looking in is pretty depressed overall and $20,000 to $40,000 price tags are common. The owner financing guy wants to charge us $39,000 overall including a $5,000 down payment. I told him this evening that we can't do that much and requested he lower it to $30,000. My agent does not think the seller will want to do a closing date extension and that if we can't get the deal done on Monday that they will want to pull the deal. Now I suspect this owner financing guy might be the one who ends up buying it if we don't. This whole ordeal is so stressful that I am considering just walking away and trying to find something else. Another part of me wants to bite the bullet and wire the $24,000... but if something goes wrong/there's some kind of huge issue I wasn't aware of it would really screw me. Ugh what a pain this is.
The owner financing guy said he cannot do a seller carry back due to new laws that were passed that require any seller carry back to be a fully amortized 30 year loan :(
@Chris M.
@Jay Hinrichs has been repeating two solid options without needing to completely overwhelm your life.
1. A Seller carried transaction with a a short amortization period and healthy interest rate to get the deal done is a solid plan.
2. Friends and family money to find cash in exchange for the same like of Note terms as the seller financed route in exchange for a first position lien. You’d be surprised at how many folks have $25k stashed under a mattress that they don’t mind putting to work for two years or so.
Thanks, Neal, hoping this guy might be open to it. You guys have been extremely helpful. I will keep brainstorming ideas. It is possible if we can delay the closing by a few weeks that I could get really creative and piece together the $24,000 in other means by selling things, getting small personal loans etc. but if this guy could do a 12% interest seller carry back for 2 years with 5k down that would be great.
@Chris M. One mistake that I see from the outside looking in is that you are too emotionally attached to this property. Once you get emotionally attached it is hard to make rational decisions. Postpone the closing step back and find a lender that is not family or friend. If that does not work walk away.
That's a fair point and you're right I have become a little emotionally invested mainly because this house will work perfectly for my mom's retirement - just the right size, in great shape but still very affordable, only 1 story and with a nice backyard that she could enjoy.
@Jerry N. @Caleb Heimsoth @Odie Ayaga I have a very interesting update on the situation: my buyer's agent referred me to a gentleman who purchases homes in cash then sells them to the interested buyer via owner financing. He has offered to buy this home for us if we can put $5,000 down, then pay $950 per month (he would pay the property taxes) for 3 years. I've done the math and after he takes care of the taxes this would result in us paying about $35,000 total for the house, or $11,000 more than what we were going to pay, but it would enable us to get the house. It is a significant amount more than we wanted to spend on the house, but it would be spread out over 3 years. Also a little nervous about doing it this way, but my buyer's agent says he's a reputable guy who has done many deals this way. What do you guys think about that? At the very least I think it's good to have as an option.
I'm also considering the option of selling my vehicle which I could probably get at least $20,000 for, then using my excellent credit standing with the auto maker to purchase a newer vehicle with a couple thousand down and monthly payments. Since I would still be paying down the original loan amount on the vehicle, this would basically be like taking out a loan from the auto maker. But this idea is contingent on me being able to sell the vehicle promptly to a private party.
Thanks again for your thoughts here guys... yes I am a little emotionally attached to this home, but after lots of searching it really is a great deal and hope that we can get creative to make this happen.
that's about 30 to 35% interest on his money good deal for him.. offer the seller a seller carry back at 12% see what that does.
Yeah it is like a 33% interest rate which is a lot, I suspect part of that is because he doesn't know me and doesn't seem to be interested in doing a credit or income verification. Might as well try to talk him down though.
I could be able to get a business loan later this month for roughly $20,000 but the APR wouldn't be much better, probably at least 25%.
who name will the home be in.. there are rules if your mom is in title and she is owner occ.. there is usury you may want to check on that in whatever state this is in. which sounds like somewhere in the mid west.. I really think the seller may jump at 5k down and 12% over say 2 years payments the same..
interest rates from private lenders who know what they are doing on small balance deals will always be that high.. at least for non owner occ.
Jay, the house will be in my name because my mom is concerned about it being listed under her name when she owes those student loans like they might want to seize it to help pay off the loans. However, that was something I was concerned with: owning the house under my name but my mom being the one who lives there. I do plan on visiting and staying for a few months out of the year (scattered throughout the year) so we could potentially get away with it?
Yeah, that's what I thought on the interest rates from private lenders for small loan amounts like this. I feel like a business loan or selling my vehicle would almost yield the same interest rates this guy is asking. The biggest pro of doing a business loan/selling the vehicle would be that I'm familiar/close to the process and know that it can be trusted. I'm sure this guy is legit but don't know him.
OK then its an investment loan for the lender and most likely usury is moot.. still would try to get the seller to carry back.. that would be simple.
Hey, Jay, sorry, I should have clarified: if I purchase the home with a business loan or by selling my vehicle, the house would be my name. If I use this owner financing guy, we would sign a new contract and the house would be in his name.
Man this is stressful. I think getting creative on my own and piecing together the $24,000 over the next few weeks would be the best way to do it, assuming the seller is okay with delaying the closing that long.
your confused.. if the seller gives you a seller carry back YOU OWN THE HOUSE.. the SELLER becomes the BANK.. if they will go for it
If they want to do a Contract for deed then yes the home remains in the sellers name until you make the last payment there are some inherent risks with CFDs mortgage and note is better for you.
Got it. I just asked him if he would be willing to do a seller carry back with $5,000 down at a 12% interest rate over 2 years. Something tells me he won't be interested since he'll only make $2,500 on the deal but who knows? Worth asking. Will reply here with his response. Thanks again for the info, Jay.
@Chris M. One mistake that I see from the outside looking in is that you are too emotionally attached to this property. Once you get emotionally attached it is hard to make rational decisions. Postpone the closing step back and find a lender that is not family or friend. If that does not work walk away.
That's a fair point and you're right I have become a little emotionally invested mainly because this house will work perfectly for my mom's retirement - just the right size, in great shape but still very affordable, only 1 story and with a nice backyard that she could enjoy.
@Jerry N. @Caleb Heimsoth @Odie Ayaga I have a very interesting update on the situation: my buyer's agent referred me to a gentleman who purchases homes in cash then sells them to the interested buyer via owner financing. He has offered to buy this home for us if we can put $5,000 down, then pay $950 per month (he would pay the property taxes) for 3 years. I've done the math and after he takes care of the taxes this would result in us paying about $35,000 total for the house, or $11,000 more than what we were going to pay, but it would enable us to get the house. It is a significant amount more than we wanted to spend on the house, but it would be spread out over 3 years. Also a little nervous about doing it this way, but my buyer's agent says he's a reputable guy who has done many deals this way. What do you guys think about that? At the very least I think it's good to have as an option.
I'm also considering the option of selling my vehicle which I could probably get at least $20,000 for, then using my excellent credit standing with the auto maker to purchase a newer vehicle with a couple thousand down and monthly payments. Since I would still be paying down the original loan amount on the vehicle, this would basically be like taking out a loan from the auto maker. But this idea is contingent on me being able to sell the vehicle promptly to a private party.
Thanks again for your thoughts here guys... yes I am a little emotionally attached to this home, but after lots of searching it really is a great deal and hope that we can get creative to make this happen.
that's about 30 to 35% interest on his money good deal for him.. offer the seller a seller carry back at 12% see what that does.
Yeah it is like a 33% interest rate which is a lot, I suspect part of that is because he doesn't know me and doesn't seem to be interested in doing a credit or income verification. Might as well try to talk him down though.
I could be able to get a business loan later this month for roughly $20,000 but the APR wouldn't be much better, probably at least 25%.
who name will the home be in.. there are rules if your mom is in title and she is owner occ.. there is usury you may want to check on that in whatever state this is in. which sounds like somewhere in the mid west.. I really think the seller may jump at 5k down and 12% over say 2 years payments the same..
interest rates from private lenders who know what they are doing on small balance deals will always be that high.. at least for non owner occ.
Jay, the house will be in my name because my mom is concerned about it being listed under her name when she owes those student loans like they might want to seize it to help pay off the loans. However, that was something I was concerned with: owning the house under my name but my mom being the one who lives there. I do plan on visiting and staying for a few months out of the year (scattered throughout the year) so we could potentially get away with it?
Yeah, that's what I thought on the interest rates from private lenders for small loan amounts like this. I feel like a business loan or selling my vehicle would almost yield the same interest rates this guy is asking. The biggest pro of doing a business loan/selling the vehicle would be that I'm familiar/close to the process and know that it can be trusted. I'm sure this guy is legit but don't know him.
OK then its an investment loan for the lender and most likely usury is moot.. still would try to get the seller to carry back.. that would be simple.
Hey, Jay, sorry, I should have clarified: if I purchase the home with a business loan or by selling my vehicle, the house would be my name. If I use this owner financing guy, we would sign a new contract and the house would be in his name.
Man this is stressful. I think getting creative on my own and piecing together the $24,000 over the next few weeks would be the best way to do it, assuming the seller is okay with delaying the closing that long.
@Chris M. One mistake that I see from the outside looking in is that you are too emotionally attached to this property. Once you get emotionally attached it is hard to make rational decisions. Postpone the closing step back and find a lender that is not family or friend. If that does not work walk away.
That's a fair point and you're right I have become a little emotionally invested mainly because this house will work perfectly for my mom's retirement - just the right size, in great shape but still very affordable, only 1 story and with a nice backyard that she could enjoy.
@Jerry N. @Caleb Heimsoth @Odie Ayaga I have a very interesting update on the situation: my buyer's agent referred me to a gentleman who purchases homes in cash then sells them to the interested buyer via owner financing. He has offered to buy this home for us if we can put $5,000 down, then pay $950 per month (he would pay the property taxes) for 3 years. I've done the math and after he takes care of the taxes this would result in us paying about $35,000 total for the house, or $11,000 more than what we were going to pay, but it would enable us to get the house. It is a significant amount more than we wanted to spend on the house, but it would be spread out over 3 years. Also a little nervous about doing it this way, but my buyer's agent says he's a reputable guy who has done many deals this way. What do you guys think about that? At the very least I think it's good to have as an option.
I'm also considering the option of selling my vehicle which I could probably get at least $20,000 for, then using my excellent credit standing with the auto maker to purchase a newer vehicle with a couple thousand down and monthly payments. Since I would still be paying down the original loan amount on the vehicle, this would basically be like taking out a loan from the auto maker. But this idea is contingent on me being able to sell the vehicle promptly to a private party.
Thanks again for your thoughts here guys... yes I am a little emotionally attached to this home, but after lots of searching it really is a great deal and hope that we can get creative to make this happen.
that's about 30 to 35% interest on his money good deal for him.. offer the seller a seller carry back at 12% see what that does.
Yeah it is like a 33% interest rate which is a lot, I suspect part of that is because he doesn't know me and doesn't seem to be interested in doing a credit or income verification. Might as well try to talk him down though.
I could be able to get a business loan later this month for roughly $20,000 but the APR wouldn't be much better, probably at least 25%.
who name will the home be in.. there are rules if your mom is in title and she is owner occ.. there is usury you may want to check on that in whatever state this is in. which sounds like somewhere in the mid west.. I really think the seller may jump at 5k down and 12% over say 2 years payments the same..
interest rates from private lenders who know what they are doing on small balance deals will always be that high.. at least for non owner occ.
Jay, the house will be in my name because my mom is concerned about it being listed under her name when she owes those student loans like they might want to seize it to help pay off the loans. However, that was something I was concerned with: owning the house under my name but my mom being the one who lives there. I do plan on visiting and staying for a few months out of the year (scattered throughout the year) so we could potentially get away with it?
Yeah, that's what I thought on the interest rates from private lenders for small loan amounts like this. I feel like a business loan or selling my vehicle would almost yield the same interest rates this guy is asking. The biggest pro of doing a business loan/selling the vehicle would be that I'm familiar/close to the process and know that it can be trusted. I'm sure this guy is legit but don't know him.
@Chris M. You clearly love your mom and are willing to do everything you can to help her which is great. Selling your car is one idea and buying a good used car. You mentioned in one of your posts that your mom is a veteran. Can she get any help through them?
One other thing to think about is if you stretch yourself too thin, what happens if an unexpected expense comes up with at your home or with your mom's home? I'm assuming you are going to be responsible for any repairs as the home will be in your name and it appears that she has a low income and no savings.
Unfortunately my mom owes a lot in student loans so we can't really get any Veterans benefits that I'm aware of for this process unless there is a program I'm unaware of. You're right about stretching myself too thin... that's why I decided not to use my own cash. It would be a huge chunk of what I have and if something crazy or bad happened with the house it would put me in a very tough situation.
I think selling the vehicle could be a viable option, online my same vehicle is selling for around $23,000, almost the price of the house. But again that means I'd have to really hustle and try to sell the thing within the next couple weeks and I'm currently traveling.
@Chris M. One mistake that I see from the outside looking in is that you are too emotionally attached to this property. Once you get emotionally attached it is hard to make rational decisions. Postpone the closing step back and find a lender that is not family or friend. If that does not work walk away.
That's a fair point and you're right I have become a little emotionally invested mainly because this house will work perfectly for my mom's retirement - just the right size, in great shape but still very affordable, only 1 story and with a nice backyard that she could enjoy.
@Jerry N. @Caleb Heimsoth @Odie Ayaga I have a very interesting update on the situation: my buyer's agent referred me to a gentleman who purchases homes in cash then sells them to the interested buyer via owner financing. He has offered to buy this home for us if we can put $5,000 down, then pay $950 per month (he would pay the property taxes) for 3 years. I've done the math and after he takes care of the taxes this would result in us paying about $35,000 total for the house, or $11,000 more than what we were going to pay, but it would enable us to get the house. It is a significant amount more than we wanted to spend on the house, but it would be spread out over 3 years. Also a little nervous about doing it this way, but my buyer's agent says he's a reputable guy who has done many deals this way. What do you guys think about that? At the very least I think it's good to have as an option.
I'm also considering the option of selling my vehicle which I could probably get at least $20,000 for, then using my excellent credit standing with the auto maker to purchase a newer vehicle with a couple thousand down and monthly payments. Since I would still be paying down the original loan amount on the vehicle, this would basically be like taking out a loan from the auto maker. But this idea is contingent on me being able to sell the vehicle promptly to a private party.
Thanks again for your thoughts here guys... yes I am a little emotionally attached to this home, but after lots of searching it really is a great deal and hope that we can get creative to make this happen.
that's about 30 to 35% interest on his money good deal for him.. offer the seller a seller carry back at 12% see what that does.
Yeah it is like a 33% interest rate which is a lot, I suspect part of that is because he doesn't know me and doesn't seem to be interested in doing a credit or income verification. Might as well try to talk him down though.
I could be able to get a business loan later this month for roughly $20,000 but the APR wouldn't be much better, probably at least 25%.