OfflineI found a seller that owns 18 properties in my area and is wanting to retire. He has 2 of his properties listed as fsbo. Said he and his wife plan to sell a few properties per year to avoid being hit hard on taxes. We've discussed possible owner financing with him and he is interested if the advantages are great enough for him. Does anyone know about specific advantages or have a proposal they use when talking with a seller about it. He said his wife does the bookkeeping, so if it made sense to her, then they would consider it.
Thanks!
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Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
Of course the biggest pro for them is by doing owner financing they don't
get hit with capital gains. They get an additional monthly income, but still
have the ability to foreclose if you were to default. With owner financing they are not responsible for homeowners insurance, property taxes, maintenance, & of course repairs.
The great thing for you is that you will have your foot in the door, so when they want to sell other properties, they will already have a buyer ... & one that they will already have a track record with, regarding payments.
You can stress how much more interest they will receive from you with owner financing vs having the money in the bank in a CD or money market(1% to 4%). You can even offer a little higher interest rate to make it even more attractive to them. Also keep in mind that a mortgage that is owner financed won't show up on your credit report, so you'll still be able to borrow from banks(if your credit is ok now).
Run your numbers to make sure you be able a have a positive cash flow on the rentals if you buy...you can go online to any of the big bank websites & plug in amounts & interest rates, base it on a 30 yr.amortization loan to keep the payments low even if they want a short term note(try to get a 5 yr term) by then you can re-fi & should be able to pull out some decent equity.
What you could also do is let them know that there are investors that you know that would be willing to buy the note outright so that they would not have to collect small monthly payments if they decide not to. You can give them my information if you'd like because I buy privately held notes that have been created through owner financed transactions. Most note holders never wanted the note in the first place but had to find creative ways to sell due to various reasons so if you mention that after the note is created you could get them a lump sum of cash for that note and I could present them a cash proposal at that point.
Gary Rabatin
Certified Cash Flow Consultant
Founder & President of Gold Bar Funding Group L.L.C.
Private Real Estate Investor
"Building Wealth by the Numbers"
Thanks so much Gary and Jill, and Goldbar Gary!! This website is invaluable! I can't thank all of you enough for taking the time to answer questions to those of us just getting started...it is truly appreciated!
We aren't sure yet if we are going to go this route yet or not. The first property of his we were looking at is a 3 unit house for $50,000, that rents out at $1495 (long-term tenants already in), but after expenses, it would only cashflow around $200. However, the biggest expense is the electricity. He has not separated the meters, so he is paying $500/month electrical bill for tenants. If we could separate the meters (and keep the tenants), then we would cashflow $700/month!
Goldbar Gary-- Do you buy unseasoned notes?
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT
I just wanted to add you Goldbar Garys' comment because I buy Notes too. Because private Notes are typically sold at a discount the seller will need to create a cash flow that is attractive to Note Buyers. To do this the seller must set the price of the property higher than the amount he is looking for to compensate for the discount that will come when the note is sold. By setting the price of the property higher the seller can create a Note that sells at a price he likes.
Increasing the sales price and value of the property will not reduce the Note Buyers discount but the adjustment leads to a note with a larger unpaid balance which could still bring the seller the desired net amount after discounting. A higher sales price can also lead to a larger down payment. That is what they call "Creative Financial Planning"
Learned something new from the DG family again! Thanks everyone! Very valuable information!
Hi Sheila! Haven't heard from you in awhile. I hope everything is going well. I am going to contact GoldBar-Gary and see if he is willing to do business will me as well.
Where can I get a Cd for owner financing Proposals or whos got one
so i can learn this process.
Does Dean have this CD
Thank you so much & God bless.
Email robert45382@outlook.com