All Forum Posts by: Dan Seavey

@Ed Wood

Makes sense, thanks for your help. It looks like the best route to go is with what @Wayne Brooks mentioned with the sub-to scenario. Take over the 75K, write a promissory note for 100K and refinance after 5 years. Maybe it is a better idea to make an offer with a 7 year balloon with the option to pay off early.

Purchase Price: $175K @ 5% 30-year = ($939/Mo.)

**I assume their rate is much lower than 5%

Taxes: $2,700 = ($225/Mo.)

Heat: ($115/Mo.)

Water/Sewer: ($70/Mo.)

Rental Unit 1: $800/Mo.

Rental Unit 2: $1100/Mo.

GROSS INCOME: $1900/Mo.

EXPENSES: $1349/Mo.

NET INCOME: $551/Mo.

Rentals are below market right now, I believe this property can pull another $100-300/Mo.

@Wayne Brooks

If we were to agree on this deal. I take over the $75K mortgage sub-to under the sellers name, and they hold the second for $100K. How would a lender see this when I want to refinance 5 years down the road? Will the promissory note paperwork by my attorney be enough for them to allow this to happen?

The property currently brings in $1900/Mo., with a net profit of approximately $500/Mo.

@Ed Wood

Yes exactly. The sellers have an outstanding mortgage of $75K. The sale price will be $175K, they are willing to hold the remaining balance ($100K). If I were to borrow the $75K from the bank on a home that is valued at $175K, they would require 25% down since this is a conventional mortgage, correct? The remaining $100K is under terms between myself and the seller. Are you saying that it is possible to get 100% financing with no money down on this deal?

@Ed Wood

I am unfamiliar with a wrap around mortgage. How would this work in this situation? Also how I am I going to build equity to be eligible to refi after those 5 years if the mortgage is not in my name?

@Ed Wood

If I understand you correctly - Make an offer to the sellers of $175K, but only borrow $75K from the bank on a conventional mortgage? The additional $100K will be a second mortgage held by the sellers? I am confused as to how I will build equity over those 5 years previous to the balloon payment, if the mortgage is not in my name?

@Account Closed

If I were to make the offer that you have suggested. Correct me if I am wrong, but wouldn't I have to pay a down payment on the $75K if I took over the mortgage (conventional 25% financing), as well as a down payment on the $100K? I am confused as to how this deal would pan out?

@Bill Gulley

The current owners were on board to hold the entire note, until they realized they could not. I am not 100% sure they would be against a sub-2 deal. The property has been on the market for 3 years now. It has healthy cash flow and strong rental property. I assume from your answer that the sub-2 will only work with some persuading? If so, I am unsure of how to execute the deal, as I have not done one before....

@Account Closed

I am trying to do exactly what you have suggested here - In this scenario, if I were to do what you suggested, will the property then be in my name and able to build equity? I will need that if I am going to include a balloon payment. The other issue is - if I purchase for $75,000 (but the real price is $175,000 including promissory note), is this considered mortgage fraud? The bank holds a $75,000 mortgage on a property that is appraised at $200,000, but I owe the owners $100,000? In reality if this were to take place, I would immediately have $85,000 in equity.

I am looking into purchasing a Duplex that the current asking price is $199,000, I have made an offer of $175,00 with 100% owner financing @ 5% with a 5-year balloon. They entertained the idea, but cannot because the seller has an outstanding mortgage, so that will not work. Is a subject-to purchase the best option in this scenario if I am trying to get into this deal with no money down and avoid a conventional bank loan? The sellers are very motivated but cannot hold the entire note. They currently owe $75,000 on the property.

The next question is - If I were to offer $75,000 and have a promissory note drafted for the remaining $100,000, will I be able to get a conventional mortgage on the $75,000 and assume the title/deed?

@Michael Wagner I have made an offer to the seller of full asking price ($410,000) and he is still not interested. He wants a traditional bank loan and to be paid off on sale, which I understand completely. He has had multiple offers but nothing he likes, and will not sell because of the cash flow. I am having trouble coming up with the down payment (37K plus closing costs/etc). Any other options or an idea of where to find help with a down payment? Thanks,

Dan

Hi all,

I have made a verbal offer on a duplex in my hometown that has been on the market since 2011. They are asking 199K, I offered 175K with a 100% owner finance clause at 5% (30 year amortization) and $0 down. I know the market very well and what this town offers, it is a very wealthy beach town and a very desirable area. The two units currently rent for $800 (2BR/ 1BA) and $1100 (3BR / 1BA). Taxes are $2,500. I have worked the numbres including utilities and according to my numbers this should cash flow approx. $500/mo. The reason I am offering an owner finance deal is because I don't have enough cash to put down (25%), as I just built a new home. I am currently awaiting a response or counter offer from the sellers. The realtor had responded that the owners are compiling some questions, etc for her - as they are not familiar with owner financed properties. The reason that I am posting on this thread, is that I am not a veteran by any means when it comes to owner financed properties. I see that there are many involved in this thread that may have some advice and/or guidance. Thanks.

Dan

@Michael Wagner

I am working on putting together an offer on a storage facility through an SBA 7a. Do you have any advice or tips of how to make this run smoothly and to put the least amount of money down out of my pocket? The facility is 410K, the bank will contribute 50%, SBA 40%, and 10% down. Is there an alternate route to avoid the 10% down (41K)?

Also I am confused as to what you are stating here that an SBA loan can be refinanced with another SBA? Any advice is appreciated.