RARE OPPORTUNITY: Owner relocating. 2 4-plexes in residential neighborhood. Each 2br/1ba units w/ washer/dryer. 100% occupied. $47,400 annual income. $375,000. Call 225-XXX-XXXX.
Does this look like something worth looking into??
Maybe…you would need to know more. There’s a $3950 per month income for a $375K property…it is probably a very thin deal.
If the seller will hold the financing at a decednt rate, it might be OK.
Keith
Say you wanted this property and wanted to owner to carry the financing…how would you approach him with this? I’ve never done any sort of deal and wouldn’t know where to start in getting him to agree to something like that.
Ask him. Sometimes they wil because it helps spread the capital gains taxes out some.
Keith
Paper is a very powerful tool in investing. I normally try to explain to them how much they will get over time.
So I offer them full price if they finance at 100% at say 4% interest only. So they get payments each year, and a term of say 10 years.
Calculate 4% interest down to the monthly payment. Then show what it woudl be each year. Then show how much it would be for all 10 years. Add that to the sale price and you can show the seller how much they will receive over 10 years. Sometimes that figure gets them!
could you split the asking price, if the owner finances you?
like, say you take the 375k and split’er right in half -
187,500
Pay 7% interest on this half - principal and interest for 30 years.
Then the other 187,500 accrues at 7% interest deferred for 5 years, with a balloon payment in 5 years (65,625 interest over 5 years for total payment of 253,125 due).
You’re monthly payment NOW would be very low in comparison to the CURRENT income from property.
Make sure you have no prepayment penalties, offer to pay off the second half earlier (say 2 years or whatever) at a discount of X%.
Refinance the property in order to do this, moving seller’s 1st half of purchase price to second position, or obtain financing from a lender who will take second position.
use refi funds to pay off seller’s other half of purchase price at a nice discount.
You earn more NOW and you earn more LATER.
And of course, this does not take into account other investments you will make along the five years that may be used to pay off the entire loan on this property or the appreciation of this particular property.
Anyway, my question was actually -
in seller financing, do people split purchase prices in half and defer payment etc.? i mean, it sounds very good for both parties.
here on LI, I’m actually playing with this idea because of the prices of properties. in order to rent here, this is the only viable option with no or little money down deals…