All Forum Posts by: Thomas Smith

I am in a partnership in which we currently own 11 units together.  A couple single family and a few multifamily.  I put myself into the unfortunate position of being in a partnership that is 95% me and 5% the other guy in terms of workload (we are both 50/50 financially).  We have only owned our properties for a couple of years.  Luckily we purchased them all well below market.  So my idea to end the partnership but preserve a friendship was to list our properties.  This way we both make a little cash and the friendship remains in tack.  Unfortunately, his dad is the realtor and this is his part-time gig.  So you can see how effective this has been.  

Yesterday, my business partner asked me to buy him out.  However, his buyout number was well above the amount we would get even if we sold the properties today (since we still have mortgages to pay off first).  

There are a few of the properties that I would love to still own but now that I know his "buyout" number, there doesn't seem to be a way to pay him off and keep the properties (he's a bit inflated with his thinking).  Does anyone have any suggestions for handling this situation?  How should I determine a buyout number considering we are very early into our mortgages?

The zero down payment is happening because of their need to sell. Instead of a downpayment, I convinced them to allow me to use those funds to make improvements to the house.  That is rare and I’m still surprised they’re willing to go for it. I’d generally expect to see someone wanting at the least about 10% as a downpayment but that’s all based on the seller.  I did promise to refinance through a bank and buy them out within 5 years.  At this time I will be able to do a cash out refinance so I’ll make money for little out of pocket investment.

What I did was lined it out as if they were the bank.  I offered them 5% interest rate over 20 year amortization schedule.  The 5% is just slightly above what I'd get at a bank.  Now, this may only work because they're not investors themselves so they don't quite understand returns like investors do.  An investor may want a higher return for carrying a loan on a property.  Plus I'm getting away with zero downpayment which I would not expect to be the norm.  

Have you asked them is they're willing to consider an owner finance situation yet?  If they aren't, you're probably best to move on the the next deal.  

I'm working on a deal right now where a house that is on the market has very motivated sellers but little interest by buyers.  It is in a good neighborhood but the house has an odd set up making it difficult for them to sell.  First step was running the numbers.  I made sure that the price that I was going to offer (close to their asking) would be able to work as a rental.  Next, I made them an offer that lined out my terms such as the price I was willing to pay, the amortization schedule term, interest I was willing to pay, and I also promised a full bank refinance within the first 5 years.  I stayed close to their asking price but also asked for certain repairs to be made before purchasing (saving myself an initial $5k just in repairs).  Basically, if you can give them what they need, they'll be more willing to work with you on the terms.  I may be paying a little more than I generally would on a rental house but if they're carrying the loan for me (with zero down as well) then I'm avoiding the hassle of the bank initially.  By lining out my specific term, they know that I'm serious.

Apologies, it will rent for $1100 and it will cashflow at that monthly rental rate.  Not a cashflow of $1100 unfortunately.  That would be a no brainer.

I am looking into a single family home. It's a 3 bedroom 1 bath single family home that is listed for $69k and in a good neighborhood. My realtor has the listing and has told me that the sellers are very motivated to sell and would be willing to do an owner financing situation. I have run the numbers and see cashflow at $1100 but with the price point, it leaves no room for large upgrades (basically no BRRR situation). It is in very livable condition, just needs some paint and the basement can be finished out later down the road. Is it worth paying around the asking price in a zero down situation? We have not talked terms but I would like to come to them with a reasonable offer where they make their money but my initial monthly payments are based on a 30 year amortization. Can anyone help me with a creative financing option that will be desirable for the buyers and myself?