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owner finance - http://www.dealmakerscafe.com Forums

Original message

jsplack

"owner finance" , Tue 1 May 21:36

can you offer me any advice on structuring this deal.
>
>
> i have a seller who is willing to sell a duplex 2br/1 bath each unit.
> $99900.00 asking, will take $5k down and owner finance $80k.
> he has a 30 year 8% $79000 mortgage on the property with payments of $700
> per month. each side can rent out between $650 - 700 per month.
> he wants 9% interest on the owner finance. My question is how do i structure
> a owner finance deal like this?. comps $65k - $80k in last year. plenty of
> investors rehabing in the neighborhood. seller job is transferring him out
> of town.
>
> thanks in advance for your insight

Replies:

wgreau

"Re(1):owner finance" , Wed 2 May 13:28

jsplack: You say he wants $99,900 and is willing to take $5,000 down and carry-back a note for $80,000. That's $85,000...are you saying he will accept that instead of the $99,900? You say he has an existing mortgage originated for 360 mos @ 8% for $79,000 and monthly pmt's of $700. Is that PITI? A note for that term and interest is $579.67 per mos plus taxes & insurance.
If you pay 9% your monthly pmt would be $635.65 + taxes & ins.
To structure the offer you write a Purch & Sale Agree't offering the agreed upon sales price, minus the $5,000 down, balance of $80,000 @9% interest for the agreed upon term. There is some necessary terminology (can't remember) for the closing that will insure you get the rents (if any) that are due. I believe you said the property is vacant so this wouldn't matter. Then you draft up a Land Contract (or Contract For Deed) that states the agreement (can get from www.legalwiz.com/forms ), make out a Promissory Note stating how it's to be paid (get off the above site, also). If you want the property to be in a land trust you will have that to do as well. First step is the offer to purchase using your Purch & Sales Agreement. Best wishes.

William Columbus OH

Dealmaker
Moderator

"Re(1):owner finance" , Tue 1 May 22:07

You're asking for advice on structuring this deal? Well it looks like that has already been done. Are the numbers acceptable to you??

Is it currently rented?
If so, what is the "current" rent?
If not, why isn't it rented?
Do you want to become a landlord that is responsible for repairs & maintenance??
What do you want to accomplish by buying this duplex?
What are the expenses per month including taxes & insurance?
What makes this a deal for you?
Does it fit into your gameplan??

Dealmaker

jsplack

"Re(2):owner finance" , Tue 1 May 22:56

dealmaker,
thanks for the questions

the unit was actually abandonded for abot 3 years. it's one that i saw when i was notinthe business. the seller bought it and rehab'd it. no one is in it presently. he was trying flip it and got stuck with an employee move. it was his first deal an he got inover his head with the repairs that removed him from his business plan.

??

Do you want to become a landlord that is responsible for repairs & maintenance??
yes, this once has all new appliances.

What do you want to accomplish by buying this duplex? positive cash flow. looking for $200 - per month.

What are the expenses per month including taxes & insurance?
i need to find out this info. thanks for the insight.

What makes this a deal for you? it will give me the positive cashflow i desire. it is in my target community. it's located in the bottom half of the area and the top half is presently under rehab. this will be hot area in next 3 - 5 years.

Does it fit into your gameplan?? yes. i want o own 4 rental properties by the end of this year.

thanks for the insight, i have some other things i need to get from the seller.

Dealmaker
Moderator

"Re(3):owner finance" , Wed 2 May 21:23

Is your plan to buy retail after they have been rehabbed?

I have no problem if anyone wants to be landlord but you need some education on landlording before jumping in. If not, you're going to train but by the wrong people.

Dealmaker