My first deal is an owner financing

I love owner financing. About how much money do you need for repairs? It sounds like a pretty sweet deal to me, 9k at 6 percent, payments only 175bucks a month, thats great. I would even go for no payments for the first 60days so you can start fixing the place up.

Jeremy

See that's what you call a deal. I hope your rehab cost is not more than 2 times the asking price. So is it a single family home.. can you share some more tid bits.
Thanks in advance
Stan

According to the owner estimates it needs about 20k in repairs,but it may not because we could always do the work ourselves. One bathroom needs to be fixed/replaced, the roof definately needs some attention as there are signs of a leaking problem, and there was a tarp over part of it, but it looks like it's been on there for a while. We will probably replace the kitchen as well, the cabinets are there, but it may be better to just replace them, one wall for sure will need gutting, the walls are plaster and part of one wall is exposed, so we'll probably pull the plaster off and replace it with drywall. The ceiling in the bathroom needs replaced and also one in the kitchen or living room, but of coarse we can replace it with new drywall, then of coarse paint and carpet. It's not the nastiest house I have ever worked on. I know part of the roof will have to be removed and new plywood and shingles put up but not all of it looks bad. Yes the payment is only $175 a month and I did ask the owner for 60 days to complete the work, and he also agreed to let me have more time so I can get it rented out as well. I'm trying to get a hard money loan to fix it up but I haven't heard anything yet. Most of the places said 24-48 hrs but I'm still waiting to hear something. It's a 3bd single family residence and 1383 sq' or somewhere around that and If I rent it out for 575/month then it's a cash flow of $400. I am also working on two other owner financing deals, one is listed by a realtor so I said I would include her commission in the monthly payment if she'd be willing to accept a monthly payment on her commission. That property is a duplex and one side is already rented. It's 2 3bd units, it's also in a good rental neighborhood. I offered the owner full asking price @ 7% interest with a payment of $600 a month plus a payment for the realtors fee of coarse, over a 5 yr term, with a balloon due at the end of the five years. I know in five years time I will have enough money to actually pay it off anyway. I'm just waiting for the owners answer, but the realtor answered me right after I sent the offer so it must be a good offer. No money down by the way. I also found another property that is listed 65% under market value so I asked my realtor to ask about owner financing on that property, or just an offer on price and I will assign it to another buyer. I have also found a fsbo property that is currently listed 15% under appraised value and the owner said they would entertain all offers. I told him generally I look for properties 30% under. It's a nice house in excellent condition. I did ask about owner financing but he said he's not in the position to offer owner financing. I asked what the minimum cash price he'd be willing to accept is, but he asked what numbers I was thinking. I tried to check what the values are on some of the online sites like zillow(which doesn't work most the time in my area) but the address wasn't coming up. That's not unusual here either. I also asked a few fsbo owners if they'd be willing to accept offers, but I haven't heard anything back yet. I also found an reo that needs work, it could also use an updated electrical panel, but that one will have to be an all cash offer although conventional financing may be an option but most likely not. That one has one wall that needs repaired, some pipe work, and paint and carpets, and linoleum or tile - what have you.

you are very creative about your deals and i really admire that. what a great job you are doing! have you considered checking out peer-to-peer lending. if you are interested, PM me and i'll give you the ones that were highly recommended to me by someone very successful in the business.

You go! glad you are thinking outside the box! much continued success! Kevin

thanks for the comments they mean alot. Rei is something I have always loved and wanted to do more than anything, I have even spent lots of money on programs that didn't help. Dean's program is the first where he actually gives you step by step help, and you can actually talk to other people who have been successful and get advice. I do really like this website. It has been an awsome source of information. No I haven't thought of peer to peer lending, so I will definately pm you. I am anxious to get started on fixing that property. We used to paint for a guy that flipped properties. He ended up being very successful and started doing new builds only. Eventually he retired and he bought a nice piece of property in the bahamas to retire on. This guy carried a briefcase filled with hundred dollar bills. That's a crazy thing to do in any part of california! He once offered us a property, he would pay off any and all credit and my husbands child support(at that time he owed child support) and pay the down payment required for financing. The property was on an acre which was hard to come by in that area but the house smelled bad and didn't look great. We already had one mortgage and I was also afraid we wouldn't be able to find a renter, what was I thinking? Fear! That was about 10 yrs ago. Now I can look at a property like that and say it just needs a little work and it'll be good to go, but back then I had lost my vision. I have kicked myself so many times for not taking that deal. Could you imagine where I could have been today if I had only started there! But you know what they say 20/20 hindsight, so to all who are afraid: you have nothing to fear but fear itself. You will never know what could happen till you try. I have always been one of the biggest chickens, especially talking to people, but this is my DREAM so I decided I need to get out there and get it done because the deals aren't going to walk themselves to me! I definately have to be creative with the financing because I don't have money for downs or great credit to get loans. Since we moved to Indiana, it's been more of a struggle because the job market is so different here. Thanks again for all the replies, I just want others to see what I did and know they could do that too!

If your numbers are on, you will have around 13k in equity when your done. But if the rents are good and it cash flows thats ok, unless your trying to flip it. If your not sure about the repairs I would have a contractor or 3 come in and give you free estimates on the repairs you want done,atleast you can get a real accurate idea on how much it will cost. plus keep in mind unexpected problems when opening things up.
good luck and congrats on taking action.
Richie.

I am having current issues with getting REOs out of the bank's hands, but am turning my concentration to owner financing. I have one owner I am working with right now, but I haven't bitten yet since he will hold the note for just one year and I do not think the house will appraise at the amount ($185k) within a year to allow me to refinance. The house is a 3-unit and cashflows (and is fully rented) so I may need to speak with the owner again and try to negotiate a bit more.

Thanks for the details and you have encouraged me to look at a different line of attack. Best of luck with your deal!

Kristin

How much money do you need for the rehab?

The owner said it would take $20,000 to fix it up but I think it will take $25,000 because the roof actually needs repaired and he didn't have that in the list of repairs. Altogether it needs: a new roof, the ceiling in the kitchen and bathroom torn down and replaced with drywall, possibly the ceiling in the living room replaced too, and at least one wall needs the plaster torn off and drywalled, a furnace or heaters, some beams in the bathroom ceiling need to be replaced, mostly because of the water leaking in, no mold though. Basically all the bathroom fixtures- tiolet, sink, and shower. Same for the kitchen new counter top, the cabinets are there but I think they need replaced, and new flooring throughout, tile and carpet. As for the roof I know part of it will need replaced down to the plywood but the rest didn't look as bad. Also I didn't notice an air conditioner so I may need to get that as well. I did try to get the owner to put in $20,000 into the deal where he would have earned 7% on it and it would have been payable over the 5yr term as well but he said he didn't really have the money to put in to it so he just wanted to get rid of it. That's how I was able to get it for $9000. Since the fmv is $43,987 I know once it's all fixed the value will be higher.

sometimes it's easier to get the reo's if they need work. Just find any that need work and let the agent know what repairs the property needs and tell them that's why your offer is priced like it is. That may help them understand. Most the reos around here that need work sit for long periods of time, like a year at least. For me owner financing is the best way to go, especially when they want out of a property because they are more willing to make it worth your while. I found a really nice house fsbo that the owner is selling for 15% under the appraisal. I talked to him and my realtor is checking to see what properties are really selling for in that area. I believe the house has been up for 45 days now, and the owner said they would entertain all offers, he's considering a job move. I didn't want to make an offer without actually knowing the fmv. I asked about the appraisal but I haven't heard from him yet. Also I don't yet know when that appraisal was done. I did ask about owner financing but he said they weren't in the position to offer owner financing. I also found another property that was fsbo where they offered assuming a loan for 800 down, but the payment would be 1100 a month and for the area I don't think it would be easy to rent out for that price. I do have another house I am waiting on to see if the owner accepted my owner financing offer (basically it's a land contract). On that property since a realtor listed it I offered to add in her commission so it would be a win for all of us. He wants to get rid of the property and I want it, and she would still get paid, so it would be worth her while for it to work out. That one is a duplex and one side is rented for $550 so if the owner agrees then it would be $600 a month to him but there would be a balloon at the end of the five years. Then minus whatever her monthly payment on her fee is I would at least cash flow $400 a month on that property, which needs no work at all!It's in a good rental area too.
You can ask the owner if he would be willing to give you another year if you need it. Just explain that the property would have to appraise high enough for you to refinance it. You also could try getting a hard money loan to purchase it. Some are 1yr loans but most are 3yr loans and they don't go by anything except what the value of the property is. They typically lend up to 75% of the fmv on a property. What terms did your owner suggest? What interest rate? The way I worked my first owner financing deal it will actually be paid off in the 5yr term. Good luck with your owner financing deals.

And good luck with your deals too!

How did you find your owner financed deals that you are currently working on?

Kristin

on zillow. I was checking out values in areas and came across different properties. Some had listing agents and some said reo or foreclosure, so I just sent a message to all the ones that I wouldn't mind keeping and renting out. Some replied they were sold, some didn't reply at all, and some said no owner financing, and one replied the seller may be interested in owner financing. I must have worded everything perfectly though because she actually thought I was a realtor that wanted the property. On some of the ones that said no owner financing I offered a low price, say 40% below fmv to see what they may counter but I haven't heard anything yet. I even found one property for $14,000 worth $71,000 that needs the kitchen and some drywall and some of the materials are there but I haven't heard an answer from that person if they will do owner financing. Lately no matter where we are going all I can think of is which property we are driving by could be a good investment or some kind of deal I might be able to do. This is what I love doing anyway. I have always wanted to own lots of properties and businesses too.

You sound just like me lol! I think it is great,I have one deal going and have eight calls from people off of my bandit Sign, yes, I have a total of two signs out 1 in one county and another in the neighboring county. Only problem is, I have buyers but only one house! ugh.. Are you in Indiana? I'm in Ky, hi neighbor if you are, might want to partner up with you if you are interested? Thoughts? Ideas? Let me know.. Kevin

Hi every one
this is my first time commenting, and i am so encouraged to just get in the game. I have just finished going through the two books an i feel armed and ready for battle ,just curious what is a peer to peer loan.

Owner financing a great way to get deals. Its very little risk and its happening very often in this market.

yes I am in Indiana, northern Indiana to be exact, but I look for properties in indy as well. Sure we can partner up sometime. I will pm you with my contact info. I don't have any bandit signs yet. I wanted to get an 800 number before I did that. I look at all different things to find houses that may offer owner financing. I even found some in a circular of houses for sale in the county I live in, but it was a few months old and those houses were gone. I have checked out a few fsbo properties but the owners seem to be selling unrealistically high. I even found a few that have been up for over a hundred days on realtor dot com that I'm going to put in offers on just to see if they go for it. I don't really want to go higher than 35% fmv though because I want to make sure there is room for a profit. I like the owner financing the best because I don't have to come up with anything up front, but I can still get a property. Even if it didn't cash flow right away I would be ok with that because the renter will be paying for me to own a property. I am thinking of putting an add on craigslist that says I am interested in any properties that a seller will finance. Then maybe even a property or two will find me lol! I have one buyer currently with a specific property list. At first I was nervous to put in offers outside that buyers' box, but as I read differrent posts on here I realized that partnering is always an option as well, so I started making offers too. I haven't heard anything on those yet. All I know is this is what I love to do and I want to love what I do for my job. Last year I worked outside my home, and going to work when it's dark and getting home when it's dark is not for me. When my youngest started kindergarten I quit so I could be home when he was out of school. I pray every day that God will guide me in all my decisions and help my business grow. For me this is a way for me to earn a living and still be home with my kids and take care of them. I think once you realize that what Dean talks about in his books is not get rich now, and you actually have to work at it because it won't just come to you, it's easy to start looking for properties. Like everyone says if you make low offers and offend people, you're not meaning them any harm personally it's just an offer. They don't have to accept it if they don't like it. Don't let them get to you either, there are lots of properties out there. Since that tax credit, so many people have put thier houses up for sale it's crazy. Lots of fsbo around here too. Now that the credit is over houses aren't going as fast. Any property you find that you really like, listed by realtor or not ask about owner financing. The worst thing that will happen is they say no way. The only drawback is usually with owner financing you will pay a higher price than you might normally on a property. I would say those kind of properties are definately for holding and renting. Thanks for the compliment.

from what I know of peer to peer lending it's like a hard money loan, but it's other investors, or people looking to make an investment on thier own money. They bid on your loan. From what I've looked at you have to have a credit score of 640/650 or so to qualify to join thier site. That's all I know of it. A hard money lender basically lends based on the value of the home.

I have read some of the deals you have done and yes they were sweat deals. Congratulations on your achievements thus far and good luck to many more to come!

Thanks. It is really a great way to do deals and get cash flow properties rather quickly. There isn't much risk for the owner at all because they keep the deed till it's paid off anyway, so it's more like a bonus for them because if you don't make your payments they just take the property back. Before we moved out here I tried several times to get a house on "land contract" that we could move into without having to get a loan to buy a house because we already owned the house we were living in and while we could qualify for the second loan we would have needed a rental agreement on our (then) current home as well as a letter from employers stating a company transfer, etc. Back then it was pretty hard, that was about five years ago so that goes to show the possiblities that are available right now in today's market.

I want my medal too! how did you get it? by doing your first deal? LOL much success! Kevin

I have no idea! I didn't see that on there yesterday, besides the first deal the only other thing I did was comment on another members journal. So maybe getting my first deal is it. Or maybe it's a certain number of points How is your deal coming along?

It's a go, just got to get the ladys son out of the house, and get my new buyers to look and move in. collect the $ and move on to deal # 2. How about your deal? What's t he status of it?

I'm just waiting to hear from anyone if I get approved for the hard money loan to fix the property up. We went over Monday to take some pics of the property and we will begin cleanup and tear down the wet ceilings and one wall the end of this week or the week after. I am going over everything that needs fixed right now so I have an exact idea of what needs done, and where I want to start.
Deal#2 I haven't heard anything yet but hopefully the realtor let's me know soon if the owner went for my offer.
I have also found a possible deal #3, but I'm not sure wether to go for it or not because the payment seems higher than I may be able to rent it out for, so I think I might have to talk to the owner on that one and see if we can work something out. Both #2 and #3 don't need any work so that's a plus.
I haven't heard anything yet on any of the wholesale properties I put offers in on, but I have found more that have been up for a long time to put offers on as well. Eventually someone will bite on one of the offers. Best of luck getting on to deal#2

I met this guy who deals with disstress properties. He told me it was come first come, first served I did my reseach in the area when and took a look at some of the properties then I made my offer, but then he sends me an e-mail which i just got this morning, saying he needs to see proof of funds letter from my bank or lender and contact info to go with any written offers. At this point what do I do? Do I need to contact my buyer? If so do we need to make some kind of a contract since am the one who found the person selling and have already placed offers Or is it a loss for me at this point?

Is this guy you are working with a realtor? You already have a buyer in place? If YOU found the person selling this property, did you do the contacting or this person you are working with? It sounds like this person is a realtor, Usually banks need a letter to verify proof of funds if it a foreclosure, from what I have experienced. If you found the seller, and already have a buyer, lock the property up under contract, assign the contract to your buyer for a profit. There is a place that says and or assigns on Dean's contracts. I am not sure but hope this helps.

Great job on your deals in the making! I have found a foreclosure, SFR, listed at 8000. ARV is between 48000-60000, I know I can get the property for 3500 or 4000 but I can't find any Hard money lenders in my area or online that will even talk to me. Do you know of any in your area I can contact? Thanks and hope we can partner up on some deals in the future! I am so thankful for all My DG family! Let me know Thanks, Kevin

try http://cashformyclosing.com/proof-of-funds/ to get a proof of funds letter, I think there is another site as well but I'm going to have to look and see if I can find that one. Normally banks will ask for that for reos and sometimes other properties. You don't need to contact your end buyer for that unless this doesn't work. Make sure the proof of funds letter states the amount you are paying for it not the amount you are selling it to the end buyer for or the bank will expect more money than you intended to spend. Good luck with your deal

Thanks, hopefully at least one or two of them work out. Thanks to the weather I didn't get to use the computer till now so I didn't get much done this weekend. That is a good deal. Some of the ones I applied at I googled hard money lenders, and there is a website http:/hardmoney-lenders.com/ that you can try. If your credit score is 640 or higher you can pm me and I know of two other sites where you can get a loan with a quick turnaround and decent rates. I do know there are also some on here that offer hard money lending, but don't take an offer from anyone who askes for fees up front besides a credit check (which is nominal)$40 maybe less than $100 definately. Anything else is illegal. There is a forum on here somewhere and some members were talking about that but I couldn't find it the other day because I saw a name on another members page that i could of swore was the exact name they were saying watch out for because several had tried to use that person and they asked for all different amounts of downs with a list of reasons for each one and when it was time to get the property, the promised hard money loan didn't show and deals fell through, leaving the investor out all the money they paid upfront besides a credit check. Be very careful whom you work with. I haven't found any hard money lenders particular to this exact area yet, but I'm still looking. I had a hard money lender two years ago that offered properties from other investors as well but I have not been able to get ahold of him. He doesn't have any properties listed on his site either. We can definately get together on some deals in the future! I am also thankful for my DG family as well, which grows more and more every day. Everyone has been so helpful to me and nice as well. They offer so much information too! It would definately be much harder without this DG community that's for sure lol!

I forgot try the ones that go by house value instead of just your credit. Also there are now 30 day transactual funding available, also known as a bridge loan. That way you have leway for finding an end buyer. Please let me know if any of these works for you. Thanks