All Forum Posts by: Wesley Thompson

 No, but if the current contract doesn't work out I won't be making the same deal with them. 

The cabin deal fell apart at the last minute. My partners and I know we didn’t anything wrong, in fact, it’s quite the opposite. We had the entire framework of the deal put together and received the 1st contract for review and sign. We were ready to sign, but there was one issue we didn’t anticipate. The seller’s agent wouldn’t represent us as the buyer. This set us back for a moment and we discussed the situation we’d be in without representation. We have a very skilled agent on our team but she isn’t licensed in TN. While we were comfortable taking queues from her, there would be no recourse for us, our partners, or investors should something go awry. So before we proceeded, we found representation (and by all accounts so far, he is incredible). We got the deal all properly structured and written and I signed the 2nd contract yesterday, and singing your name on a million-dollar deal is scary and exciting! Today, we received a call they received another offer and decided to take it instead of ours. They asked if we want to be a backup offer and we declined. We put a lot of time and effort into getting the deal to the goal line and having it taken away at the last minute hurts. I’m old school in the way I view a handshake deal – which is what I thought we had until earlier today. I learned a lot through the process though. I learned I can spot opportunities in the unlikeliest of places. I can successfully negotiate a creative finance deal and listening to the seller's wants, needs, and goals is everything to make the deal happen. We also learned bringing the right representation into the process early will save potential headaches down the line. I also learned no matter how solid of a deal you think you have until the pen is to paper (or signature is to .pdf) nothing is truly over. I’m a little bitter that it ended this way. I think it's mainly due to the fact I took the time to learn about the seller and actually cared about getting them to their goal. I doubt the new buyer cares. I hope the seller gets everything they want out of the deal and everyone walks away happy. But if things don’t work out, they know we’re still interested. But the deal we’re interested in making tomorrow will not be the same one we were willing to make today…..

 He owns several plots in the area he plans to build on. Once one is complete, he uses it as a primary for awhile and builds another. His plan was to flip each one for his retirement, but realized he could seller finance them to us and continue to get paid! He even said he's open to working with us on designs to meet our needs! Sounds like a win-win

 The 4 small cabins on the top all convey fully furnished with all appliances and supplies. They're all in a gated development next door to each other, but enough space to not feel cramped. 

PP: $1,000,000 / DP: $370,000 / Seller Finance remainder at 4.5% / 30-year amortization with 10-year balloon / Interest Only payments for the first two years. 

1st-year projections are 14% CoC return, but none of my calculators are built for IO projections coupled with P&I projections so I have to work on that.

The 4 cabins gross nearly $150k per year and the seller's proforma puts them just above $100k/year net. Mine is much more conservative and I know there are some expenses they didn't include. 

The seller is building another home nearby which will be complete in 4-6 months. The 5th cabin (bottom two pics) is his current primary. We almost came to an agreement on that one too, but he has financing on it and a line of credit which funded the new build. We'd have to clear out both of those notes and he would seller finance the rest. However, that sounded almost like buying the new house for him. So when it's complete he's going to finance it (pending appraisal) clear out the line of credit and then we'll close out the financing with a down payment and he'll finance the rest to us.

We already have a comp for the cabin that did $30,000 gross in the last six months and we think we can do better!

My partners and I are under contract on 4 STR cabins in Tellico Plains, TN! The cabins already have strong rental history, occupancy rates, and historic revenue growth. We plan to introduce software and systems to maximize revenue growth and automate them as much as possible (we're all out of the area). We got a fantastic seller-finance deal with the opportunity to add more cabins into the portfolio from the seller; who is open to working with us on developing more cabins in the area! Really excited, can't wait to see this business grow!

 Thanks for the clarification @Brooklyn McCarty. Will plan to start from scratch!

 liking the new podcast BTW... :)

 As in the OTA booking or their direct booking site?

Greetings BP Community!

My partners and I are very close to locking up a contract on 5 cabins in East TN (not near Gatlinburg). They're fantastic properties with great history and the seller is financing. This is my first time negotiating a deal this size, my first time into STRs, first time likely raising capital, and since it's my first time utilizing seller financing; I would like to solicit any input for the deal framework. The Purchase Price, Down Payment, rate, and terms are all decided. Now we're just into the details such as pre-payment penalties, transfer of OTA profiles, direct booking site transfer, closing timeframe, and escrow money. Anything else I should consider before locking in the contract?

@Dustin Verley

With Subject-to financing, the loan(s) stay in place. The 'buyer' takes over the responsibility of paying the loan(s), which are in the seller's name. So for this deal, the VA loan and the solar loan stay in the seller's name. The buyers make the payments to those loans. The note drafted for the agreement and parties is serviced by a note servicing company. The buyer sends payments to the company, and the company makes the payments. There are several ways it's structured to mitigate risk for the buyer and seller but I'm not going down all those rabbit holes right now. Since this is my first sub-to and wholesale, I was only interested in assigning the contract to a) someone I know & b) has experience with sub-to deals. It's my responsibility to protect myself and the seller. Seeing as how they are military and I am too, I'm not going to allow them to be taken advantage of, and want them to be happy with the deal and the buyer. The buyer plans to use it as an STR and there is enough room for profit for them to make the deal palatable. They're into it for about 10% of the purchase price (sum of both loans) with a very low-interest rate locked in on a 10-year balloon. They'll make back the initial investment within the first year... enjoy an infinite return for the next 9 years while they gain equity and loan paydown. Then they can refi or sell in a decade into a loan in their name.