All Forum Posts by: Terry Royce

There is a property in a neighborhood I already own 2 properties in and am looking for others

I proposed owner financing to a seller I came across and they are open.

He said he wanted 20% down, 6% interest w/ 5 a year balloon. Taxes and insurance would be $168 per month additional.

The property was just rented for $1,100, and you could say it is "turn key", however, I would updated the kitchen and do some other items totaling apx $4-7k. I think the upgrades are worth it based on my experience, because I should be able to bump the rent to $1,250 and have less vacancy as the nice properties in this neighborhood rent quickly. My last one had 2 applicants in the first day...I know thats all "current market conditions", but that's what it is.

Anyway , I'm asking for input regarding the financing. I have not done any negotiating yet, so the terms could change. but I'm always excited by owner financing as it makes the purchases smoother IMO, and you don't have to refi quickly, which saves money, and the interest is usually alot cheaper, and includes principle.

Thoughts, input, suggestions?

I would try to structure the contract so that the current owner would have time to file it. Why hasn't he done so already? Most buyers are not going to want to take over with non paying tenants. That increases their holding costs, and decreases what you can sell it to the end buyer for.

I prefer to structure it with the buyer paying. As Seth said the interest can increase during the closing process, and I try not to eat it out of my side.

I have picked up some properties by driving for dollars. The best are the FSBO deals.

I see alot of mail houses offering these options now.

What are the pros and cons, I've only done 1st class in the past, b/c it was all that was offered.

Thanks

-Terry

Build your case for the offer, using the repairs needed, and comps that support it.
Don't just throw the offer out, explain it and make them understand why it is what it is.

Don't over think it.

Welcome.

Baron Herron - Welcome. I am in the Baltimore area, and have been doing real estate since 2007.

Possibly doing an Llc assignment.
Is there a deed restriction preventing a double closing?

Javon Rice - There is less competition in bad neighborhoods. Nothing beats a solid deal in a good neighborhood, they are easy to sell. However, I wouldn't shy away from "bad" neighborhoods. I would focus on a few that are popular rental areas. I have closed some great deals in "bad " neighborhoods. I hope that info helps.