Found 4 more possible rentals!!

Just got a reply on my email and he said im open to all offers!!

Anyone got any suggestions what i should offer?? This is the part i always need help on!! lol

All 4 are really nice and are in really good neighborhoods...

If all are currently rented and have good rental history or solid leases, it sounds pretty good if you can really pick it up for a lot less than $340k. However, every place I have bought a home a country appraisal is only LAND (without any residence) value for assessing property taxes, not the actual market value of the real estate with a house/building on it. If this is the case in your area, the price is going to likely be way more than $340k.

You don't need to worry about what a good offer is to the seller. You crunch the numbers, figure out how much you want to make to have the responsibilities of rentals and properties and you offer that number or better. Start with a lowball and work your way back to that magic number. The worst they can say is no, and then you move on to the next deal.

The only numbers that came from county website is the appraisal the rest of the information (taxes and insurance) came from the owner which agrees with the county website. so im thinkin i am good on this.

I am thinkin 290,000 to 300,000 but i want him to finance the whole thing if he is willing. Just don't know what to offer as far as % for interest.

Im still not 100% on how owner financing works. Like if 2 years down the road i want to refi this place and pull my equity out (which i should have a bunch) do i just pay him off? is there goin to be fees for early pay off or is all of this just stated in the contract?? I know the owner is basically your bank!!

He is going to want to benefit from this deal as well. I would consider offering him one or two points higher interest than what he is locked into currently. This should be part of a counteroffer if he rejects your initial offer of assuming his mortgages as is. It also depends on how much equity he has in the properties currently.

Two thoughts.. First, find out what HIS payment is. That is probably a floor for what you can offer.

Second, just use the calculator on this one and create the payment you want.

300K @ 7% = 1996 per month
290K @ 7% = 1929 per month

300K @ 6% = 1798 per month
290K @ 6% = 1738 per month

300K @ 5% = 1610 per month
290K @ 5% = 1556 per month

All sounds good. Im goin to head up and look at these in person. I have only seen pics so far!! so looking forward to how they really look!!

No.. Never accept a pre-payment penalty.

so i looked up sales on the county website and he bought all 4 in 05 and 06 and paid 199,400 for them. He has went through all 4 and remodled including HVAC, windows, and roof... so i would think at 290,000 he would be making a profit. I may go 280,000 for first offer...hmmmmm what to do what to do!!! lol

if all the numbers are what you say they are, this looks like a can't miss deal. whatever plays out, this guy is going to make a killing on this deal, and it sounds like he is giving you free reign with the structuring of this deal. it is tough to tell what he is thinking. is he playing mind games with you? is he that motivated to sell?

Based on these numbers, I think you can feel free to offer low. Remember, you can ALWAYS raise your offer but lowering it is more difficult.

So i talked to my banker today and he suggested that is offer 250,000 at 6.5% which is exactly what i did. I emailed him my offer and im waiting to here back from him. Guess we will see how motivated he actually is. I would love to get these for around 250 or 275!! that would be awesome!! Ill keep ya posted!!

Thanks,
Shaun

So he emailed me back and he didn't say no but he wanted some more details which i need some help on! He asked:

"I would need more specifics. Downpayment? Insurance? Maintenance? Is this a land contract? Who pays fees? What is a balloon date?"

So downpayment im goin to try and get out of or spread out over a 24 month period of something.

Insurance and taxes i would pay wouldn't i?

I would also take care of all maintenance and rent and vacancies.

Land contract??? I thought we were owner financing? Would it be better to do a land contract?

And what is a balloon date??

HELP!!!!! LOL

Thanks,
Shaun

P.S. My offer was 250,000 at 6.5% for 30 years. Then i said but most likely you will be paid in 2 or so b/c i will refi all 4 properties...

Here's a link for help.

In this topic, Anita has explained pretty much the whole process of owner-financing. Hope you find everything you need there.
http://deangraziosi.com/node/4037

For more info on land contracts:
With a land contract, the seller would actually hold the title until you have fully paid for the property. Read this info on "land contract" , or "contract for deed". (Of course you can google it yourself for more info, too.)

http://www.wisegeek.com/what-is-a-land-contract.htm

http://en.wikipedia.org/wiki/Contract_for_deed

Definition of balloon payment is in there as well.

Rina

Shaun, have you tried using the mortgage calculator in the Student Resources?(in Calculators and Tools) You can also print out an amortization schedule.
http://deangraziosi.com/calculators/Mortgage-Payment-Amortization.html

Rina

Land contract is better for the seller than for you.

A balloon means that the loan is due and payable in X years ie a 5 year balloon means that you would have to pay off the loan (refinance) in 5 years. Typically, the seller doesn't want to wait 30 years to get all the money. I would ask for a 10 year balloon and shoot for 7. Anything shorter than 5 and walk.

If you own it, you pay the taxes and insurance.

So i talked to him on the phone today and he said he could not except my offer of 250,000 at 6.5% b/c he owes more then that and that interest rate is to good! He said he can't even get an interest rate that good right now. Which i don't believe that one bit.

But anyways we talked and i told him im just getting started in this business and that im 22 years old and really want to do good at this!! So he said well i started when i was about your age so i know where your comin from. ( This guy is a big time investor now) he said i had people help me out when i was just gettin started so i would like to help you out as much as possible. Let me crunch some numbers and get back to you, and oh by the way i have an 18 unit and 22 unit complex that i want to get rid of also!!!!

Jackpot!!!! He is willing to do owner financing on all of it and willing to let it all go for a sweet price. Only down fall is he has to have a downpayment. I will find a downpayment if he comes back to me with a sweet price!!

Ill keep all of you posted!! Looking good so far!!

Shaun

I'm excited for you. Can't wait to see your next post, Shaun!

By the way, I know where he's coming from on the interest rate. Rates really ARE going up for investment loans. But hey, he might just go for it! You found the right buttons to push!

Rina

Good job Saun like Anita says IF YOU DON'T ASK YOU WANT RECIEVE. Congrats on that and you are an inspiration. Also you might want to include in your team a Loan officer/broker you can call them any time and ask what the rates are they change every day so you might want to check everytime you make a deal. Lilie