All Forum Posts by: Taylor Shields

The relationship is your single greatest advantage! Banks don't care about you and they don't let you control the terms. You both get a tax benefit as she won't have to pay a large chunk of capital gains to the government and you get to deduct interest. 

I don't know if you have already had the seller finance discussion with her but a great way to get that door open is asking, "what will you do with the money from the sale of the property?" Then you can explain what kind of return you could get her and it would be secured by this property that she knows and is familiar with. GET AS LONG OF TERMS AS POSSIBLE.

Some additional benefits: Many times the seller who is financing will come back to you and say they want to get some cash or they want you to cash them out because they need it for something. At that point you can negotiate a significant discount.

Since you are the maker of the note you would have the ability to move the note to be secured by a different property (as long as there is sufficient equity), or should you sell the property you would be able to leave the note in place and use it for or to aid in the purchase of another property. To move the note you would need the beneficiary to sign a reconveyance. If your friend (the beneficiary) has been receiving payments for a while its likely that she wont want to be cashed out and you can use that cheap money over and over again. 

You also have the ability to split the note into pieces and secure them against separate properties (with beneficiary approval). Should you sell the property, You also have the ability to wrap the note with your own note for long term cash flow. There are all kinds of creative things you can do with seller financing. 

I don't know exactly how this financing would affect you when getting a institutional loan.

What kind of terms are you thinking for the note? and what kind of cash flow will that get you?

I second what @Neal Collins said. You are also a 30 minute drive from Hood River which as you know is called the wind surfing capitol of the world. Lot of tourisms from all over the nation and world. You might consider something like Vacation rentals there. I often have. 

I honestly think you have an advantage because you are limited to a fairly focused area. Here in portland its difficult to have laser focus on only a few areas. Just because prices are higher I wouldn't count Portland out of the cards either. If you were to do business here the distance would prevent you from wasting time, and keep you far enough away from any rentals to keep you from self managing and going crazy=)

Before you make up your mind about low income housing make sure you interview as many landlords that are familiar with it as possible. 

I don't understand that at all. I have no clue why you wouldn't answer the phone from a bird call off of a direct marketing campaign. At least call back the same day!!!! Maybe they sent the letters in an attempt to avoid human conversation and it made them feel like the got something important done. 

@Jay Hinrichs 

I believe @Mike Nuss just closed on a nice one recently. 

I hope so too, that would be a great Christmas present.

@Jay Hinrichs 

Love it, Been thinking about a strategy like this in Portland for the past couple of months. Still working on convincing the wife....that's the hardest part!!!

Door knocking is a phenomenal method and you SHOULD be doing it. It is not for people with a lot of time and no money. Here are 6 reasons that I can think of 

1. Self confidence boost

2. You become a better communicator

3. Mailmen, Police Officers, Garbage Men, City Inspectors make AMAZING "Informants". So does the lady that is gardening, and the dad waiting to pick up his kids at the bus stop. Everyone you meet door knocking can be a bird dog for you. 

4. You will get to know that neighborhood better than every other Investor/Realtor

5. Neighbors will tell you everything they know about the neighborhood, any dilapidated houses, and things like..."I was just talking with sally next door and they are thinking about selling their house, they are going to put it on the market for 200k but they said they really only want 160k" Last week, I just got leads on 3 vacant houses from a neighbor.  

6. You will find deals. 

@Jay Hinrichs can you think of any more reasons why door knocking is beneficial? or any stories?

5,000 sqft lot, 1,000 sqft house. 3 bed 1 bath. High density zoning, able to build apartments or condos. ARV for comparable development projects 1,400,000.

The initial strategy was to take the existing loan sub-to ($163,000 + $20,000 in reinstatement fees), get the seller some cash at closing ($20,000) and then some additional owner financing ($45,000 for 1 year, 4% interest only payments). This was done in order to make the deal more appealing from a development standpoint. The terms would allow a developer to save money during permitting and prior to construction.

Since the property is zoned RH (residential high density) , I got it under contract at $240,000 and was hoping to wholesale it to a developer for a $20,000 wholesale fee. They would then demo the existing house and build condos or apartments. There’s a similar lot with condos on it less than 5 blocks away. Sounds easy.

Except my baby has some defects…There’s a strip club close, only on street parking, and near a busy street. Worst of all, nobody wants to hold it… I mean buy it.

You can't flip it, the ARV for the existing house is $290,000 and est repairs are 30-40k. That leaves no room for cash to seller or a wholesale fee.

I will still wholesale it, however, the only option I see is renegotiating this in favor of a subject-to hold. Payments are 1,100 PITI and it could rent for 1,500 to 1,600. Then it could be flipped down the road in a few years or kept as a long term rental.

The numbers would look something like this:

Reinstatement amount: $20,333
Repairs (to get rent ready): $10,000
My wholesale fee: $5,000
Cash to seller:?

Buying costs: $35,333 + amount re-negotiated with the seller

I’ve said all this to ask, How would you approach the seller to renegotiate this situation? Remember, This guy has thought for the past 2 months that he will be getting a total of $65,000 out of his property, now you have to go back and try to get him to take a fraction of that. He has a small daughter in the 1st grade and wants to use the proceeds from the sale to move into a mobile home.

Looking forward to your responses

Oregon, Portland, Washington 

@Jay Hinrichs 

 It would be awesome to see you at the group. I think you would be able to give and take a lot of value from it.

@Mike Nuss 

@Jay Hinrichs 

@Andrew Cordle 

Message me for the address

I am looking for any builders that want this project as well as any commercial lenders that would be interested in financing it. If you know anyone interested in something like this please send me a message.

Wholesale Price is $260,000

THE TERMS

Subject-To Existing Mortgage: $175,000

• Payments 1,112

Seller Finance in 2nd position: $45,000

• 5% Interest Only
• 1 Year
• Payment: $187.50

Due at Closing: $40,000

THE SIZE AND ZONING

5,000 SqFt Lot (Width: 50ft Length 100ft)

• There is a 1,000 sqft 1950's house on the land

Zoned RH (High Density

• Floor Area Ratio of 4 to 1 = 20,000 Sqft
• Max Height: 75 Ft

Estimated Minimum Setback Requirements

• Front: 0 ft
• Sides: 7 ft
• Rear: 6 ft

No Parking Required because its in 500ft of transit

THE POTENTIAL

The property is located in the Westmorland neighborhood and located approximately 3.5 miles southeast of Portland’s city center. It is flanked by the Willamette River to the west, Sellwood to the south, Eastmoreland to the east and Brooklyn to the north.

In 2012 this condo building was built within 5 blocks of the subject property.

Sales Prices:

Unit A: $229,900

Unit B: $229,900

Unit C: $225,900

Unit D: $225,000

Unit E: $247,000

Unit F: $245,000

Total: $1,402,700

Estimated Building Costs: 700,000 - 750,000