Buy and Hold Financing

I'm not totally sure about what the secondary market is, but we're not having any trouble getting financing right now. We're getting an FHA loan on our first property, and there seem to be plenty of them available for further loans. Also, Fannie Mae is expanding the limit on investment mortgages from 4 to 10. For future loans, we'll probably need more down pmt -I'm hearing 25% on investment properties, but with a few assignments in between, it shouldn't be too hard to get ready for the next buy and hold.

The only thing I'm having trouble finding is a lender who do an a cash out refi with less than 6 mo. seasoning in oregon. I'd love a referral on that one!

good luck! the money is out there. also remember to look for OWC - they're still available if you look for them.

tracey

Thank you for your advice. I am hestitant on the OWC. Do you give up to much to get the seller to finance? Will the seller take control of the negotiations and require full asking price? I know it doesn't hurt to ask for it to see. Do you put an offer in asking for the financing?

Say asking price is $370,000; seller bought the property in 1995 for @231,000. I think I could probably get it for $300,000, but need down payment. I can use a HELOC, but seasoning to pull the equity is the next question. Am I giving the seller to much control in the negotiations by doing so?

Need advice regarding owner financing. My concern is that the seller gains to much control in the negotiations by backing the deal. Of course, if the seller does not back the deal it might not happen. So, here is my dilemma on the financing.

Anyone that does this a lot have any advice?

I haven't done that yet, but I don't think that it would give the seller too much control. If you want to control the negotiations, then you control them. If you throw out there, "would you consider carrying some on a contract" - you don't have to make it sound like your whole world depends on it. Just lay it out on the table, see how he reacts. That's where it's good to have done some talking with them (more specifically, let them do the talking, you listen) and see what their magic buttons are. Does he need all his equity out to put down on a place at the beach, does he just want free of the responsibility and not need cash for a particular need right now, etc. Just casually ask what his plans are once it sells and then let him talk. You can find out a TON. Then you'll have a better idea if he's even in a position to carry.

Then, just make sure you put it out there like it's just one of many options for you. He doesn't need to know that it's the only way you can think of to make the deal work. And, if you're getting a good enough deal, then you have some wriggle room to make him happy on the price - not like asking price or anything, but you can give a little - or give him asking price if he'll do some ridiculously low interest and no payments for the first year, etc. If he sets the price, you set the terms - you can work it out.

Just make sure that you're getting a good deal. If $370k is the FMV, $300k is only like 20% below that - okay deal, but there's lots of GREAT deals out there right now.

anyway, this is all theoretical on my part from reading and the little talking I've done so far! Good luck and keep us posted! I'm rooting for you!

Tracey

Thanks Tracey! I will work with what you have adviced. Good information.

The actual asking price is $405,000; I left off 35K in error. There are three duplexes right next to each other. In a good part of town. Current owner bought them for $231,000 and is the listing agent. I will go directly to him with my offer. I will start at $275,000 with a target of getting them at $300,000. They will cash flow a pretty good amount from what I am figuring. I have not looked at them yet and will need to get financials for the current owner.

I will post more information when I get it.

Thanks for the advice.

Keep us updated! Make sure you've included everything on your cashflow analysis, too. Maintenance fund, seasonal landscaping costs, taxes and insurance (if not included in the mortgage pmt), vacancy rates, advertising costs, etc. (I mention this because I left some of these off on our first deal, and luckily there was enough cash flow in it that it turned out okay, but I wouldn't want to see someone else get bit by this!)

Also, have you gotten some comps to see what the FMV of the property is? don't go off their asking price, or previous sale prices, or even the tax assessed amount - get comps from a realtor in your area.

Tracey

I think I have found a really good mortgage broker here in Southern Oregon. Not sure where you are. But I spoke to him today and he thinks he found a lender willing to do 10% down and 3 points, basically 13% down. Better than what I have been hearing of 25%. Monday he is supposed to call me to confirm. if you want I can ask him if they do cash out refi's with less than 6 mo for you. If they do I will give you his information.

Let me know,

Rusty