All Forum Posts by: Rob Simpson

I am interested in selling my 4/2 SFR. In order to attract a larger pool of buyers, I am willing to carry a 2nd mortgage. I have been reading up on owner financing and seller carry-backs, but there has been no exact detail provided on how a seller who still carries a mortgage goes about working the deal.

For instance, if I still owe $140,000 on the property, and I offer to carry up to $40,000, what happens next if a buyer takes me up on it? Here is what I think happens, but I am not sure:

A. The buy takes out a primary loan up to $100,000 from a traditional source(paying a down payment to the source).

B. The seller and I close with an agreement that includes the terms of my carry-back, what happens in a fail-to-pay situation, and property maintenance requirements during the term I carry the second note.

C. We close with real estate attorney and title company. I get the $100K from the buyers. The buyers get title to the property.

D. I take the proceeds from the sale plus any extra needed to make up the balance on my previously existing mortgage, and pay it to my lender.

E. Collect payments from the buyer until my note is paid off.

Hi Michael,

In "real life" (opposed to my secret investor identity) I am a web developer and run Ally Web Solutions, LLC, on a daily basis. I'd be happy to help you get some knowledge under your belt.

"SEO" is an acronym for Search Engine Optimizer/ation/ed. (The suffix changes depending on who you talk to). The entire point of the acronym involves an individual using programming techniques and content placement to structure the semantic "flow" of your web site's data. By doing so search engines will be able to determine, in their computer logic, what your web site is all about. Keywords play a good part in this, but equally important is the placement and "mark up" of those keywords. Social linking, as I call it, plays the next largest role. This is the one that not everyone has control over because it is the "street cred" your web site has in a given subject. For example: if BiggerPockets.com linked to your site and called it "The Best Wholesale Real Estate Web Site Ever" then a search engine (say, Google) might determine that BiggerPockets is "voting" for your web site as a web site dealing with wholesale real estate. Enough votes like this and your web site stars to ascend higher in the search results.

Template web sites can be great because they offer a fast, inexpensive deployment solution. When clients work on a tight budget, I advise them to reduce their design costs by utilizing a template.

Wordpress is a content management system (CMS). There are HUNDREDS of such systems on the internet, but something about Wordpress made it hugely popular. It grew from a tiny CMS into a very popular CMS in the span of six months, I'd guess. It "blew up." CMSs help folks who do not know how to write web page code by offering them a rich-text editor (akin to Wordpad for Windows) to author their web site's content. So, while you might not know the code to create a hyperlink, you can click a button, fill in some details, and the CMS inserts the necessary code for you.

Uploading is a word that means "sending" data to another place. When my clients ask the difference between uploading and downloading, I use an analogy involving cabinet shelves. Imagine you wake up late at night and simply must have an Oreo cookie. You stride into the kitchen and open the cabinet to retrieve the cookie pack. It's on a high shelf so you must bring it "down" in order to get your Oreo. You "download" it to your hands in order to have access.
Having eaten the last Oreo, it is time to restock. You come back from the grocery with a new package. Open the cabinet and place the new package "up" on the shelves. So, you have "uploaded" your package to the shelf.

Do you see the difference and understand its analogic meaning? In the web world, when you download a file, that means you are bringing a file from somewhere else to your computer. When you are uploading, you are sending a file to somewhere else.

FTP is an acronym for File Transfer Protocol. The entire purpose of FTP is to upload and download files from a specific place. Many programs are available for download (for free) which facilitate this process. Here is an example of what FTP might be used for: a web developer (me, maybe?) creates your web site on his personal computer. Once it is finished, he has to upload the web site (all the files which compose the site) to a computer that is specially configured to host the web site for the entire Internet. He would use an FTP program to do this.

I hope this has helped. If you have more questions, please let me know.

// Rob

Oh, and no - I didn't do the deal. I've called it off.

So, in the end I shot in a bid starting at $91,200. He goes to $105,000. I countered at $93K, he finals at $99K and a $5K seller's credit saying any less and he's in short sale territory.

It'd cost roughly $2,500 (if the numbers my agent collected are accurate) to split off the water and pin the utility to the tenants. 10% for management and another 12% for vacancy/repair reserves and I'm still looking at a 20% cash-on-cash return.

You guys are pros, and I'm not. I just look at my stock portfolio, my IRA, and my 401k and see my tiny returns and think: 20% whoa!

Sorry to hear the sad news. I hope you and your family are doing well, though.

Because I will have no children, the question of what will happen with my estate when I pass has entered my mind. I've been thinking about donating them to a charitable trust. Here is a link to a resource I found most recently:

http://www.lennington.com/global_pictures/Should%20you%20donate%20real%20estate%20to%20charity.pdf

Just my two cents,

// Rob

I agree, Bill. You just don't see those kinds of prices, nor get sellers willing to let go of their properties for $60K less.

Bryan R.,
Does your photographer get the seller to rent furniture when staging or use the existing furniture?

All,

Thanks for your experience and input. After I received another email from the agent, I discovered the water is paid for by the seller, too. This was disclosed as a tenant-paid expense. So, it ended up being an extra ~$115/mo hit to the cash flow, or 24%. I told the agent that would definitely impact the offer I made. The property sits on 0.3 acres and the roof is probably at half its useful age: 13 years. Still waiting to hear if the wiring is up to code.

The seller, I discovered, is trying to liquidate because he's moving to China! So, maybe that makes him motivated.

If anyone is interested in what it boiled down based on the adjustments I've made to my spreadsheet, here is a link to the spreadsheet:

http://nicodemas.com/rebecca.jpg

Nathan, talk to Mr. Paul Floor at DirectMortgage, Corp.

Jon & Joel, I appreciate your insights.

Joel, I question including management costs into the NOI, because that is a choice I make - not one the sale itself forces me to make. In this case, the seller manages it himself (he lives next door). So, I wonder how do you justify it to the seller when you tell them they have to sacrifice from their asking price for a choice you make to hire out management?