All Forum Posts by: Turner Wright

Thanks for your reply!  I have decided on converting my 3/1.5 into a 7/3 room-sharing rental with PadSplit.  I have already started construction and hope to have rooms listed by the first of January.  Considering the market right now, as you mentioned, I believe this will be the best option for my situation.  At least, I'll be coming out ahead.  I'll be turning a $1,550/m rental into a $5,600/m rental before PadSplit fees, utilities, etc.  I'll update the BP community on my decision and progress, soon.  Thanks again!

 Sorry for the confusion.  Per your request:

1. What did you pay for the property?  $177k

2. What are your closing costs?  $22k

3. What was the renovation cost?  No renovation, yet.  But, $60k budget.

4. What are carrying costs and estimated closing costs ?  $2,200/m and $10,800 for commissions (6% x $180k)

5.What is the agent telling you can sell it for? AS-IS, $180k.  $250k if we rehab it and get it on the market in a few weeks.  Remember, this all started because I thought I could sell it for $310k after rehab, which the appraiser also concluded to.  But, interest rates have gone up 3 times since I started the buying process and the market cooled down in the area.

So, I think that is where the confusion is--AS-IS vs REHAB.  I'm losing out, regardless, whether I rehab the property or sell AS-IS.  Two realtors said I should rent it out, but the most I could get for rent is, $1600/m.  I was quoted a rate of 8.125% for a 30-yr fixed refi, which puts my monthly payment over $2,200 ($232k + TITI), so I'm losing out on rent, too.  I'm aware of Owner Financing, Lease Options, and Room Sharing, but are there other creative strategies I could consider to minimize my losses?  I'm leaning towards Owner Financing.  Thank you for your interest and any help you can provide!

@Chris Seveney

If I was lucky enough to sell the property for $310k, then I would make about $33k profit. $177k purchase price plus $22k cash at closing plus 60k rehab plus $18k agents’ commissions = $277k.

$310k — $277k = $33k profit.

However, realtors are saying I'm lucky to get $180k as-is. So, ($277k + $22k + $16,800 for 6% commissions) from $180k = -$35k, a big loss. This is why I am reaching out to the REI community for help.

What other strategies are there that can help me minimize my losses?

I’m in a bad deal and I want to know how to structure an owner finance transaction to minimize my losses.

Quick Backstory: I purchased a deal from a wholesaler in an investor-active neighborhood, but estimated too high ARV ($310k). Interest rates went up 3 times since I secured lending and buyer activity has slowed down. If I sell as-is, I lose about $20-30k. I'm hoping an owner finance will be a better option than renting it out with a large down payment and higher interest rate payments. Details:

Purchase: $177k

Cash at Closing: $22k

As-Is Price (per Realtor): $180k

Estimated ARV (per Realtor): $250k

Quoted Interest Rate for Refi: 8.125%, 30yr

Agents’ Commissions: 6%

There is interest already on FB Market Place and from other Facebook groups who are asking for terms, but I don’t know what to tell them. I’m thinking of 10% down at 10.25% interest, but I’m not sure for how many years or with a balloon payment or not.

Is owner-finance a good strategy? What would work during this time? Anyone willing to discuss this over the phone? Anything helps, thanks!!

 Renting it out is an option, but I'll be losing money every month to pay my note.  I was quoted at 8.125% for a 30-year fixed mortgage loan, which put my monthly payments around $2,700.  Max rent I could collect, according to a couple of realtors I spoke with, is $1,550.  Not to mention, I will have to come up with closing costs.  This is why I am considering owner financing and lease options.  With both, I will receive a nice downpayment and inflated monthly payments, which will help with paying my loan.  Thanks for replying!

 Hi Jonathan!  You lost me at F/F loan and PPP.  Can you explain?  Thanks!

 Thanks for sharing, Bradley!  I'll definitely check him out!

@Steve Vaughan

Solid plan, thanks! I did consider lease option. Believe it or not, though, my interest-only loan at 11.25% is better than what I was quoted with a PITI loan at 8.125%, so I'm going to ride this loan out full-term.

I’m also considering room sharing with PadSplit.

@Dan Heuschele

Thanks Dan! An investor/Realtor, myself, and even a licensed appraiser came up with an ARV of $310k, but it seems the market cooled down a lot while securing financing. I've decided on room sharing with PadSlpit.

@Luis Chug I’d be interested! But, I suggest you make a new post so more people will see it.