Family Units… I have seen some ads in my area concerning some folks who are selling Duplex, Tri’s, 4plex’s etc… that are willing to do 100% Financing, Contract for Deeds etc…
I am a beginner so let me tell you if I am reading their ads correctly. When they advertise like this they are saying that they will be the bank for you for a specific period of time. Say 5 years. I am guessing, whatever the terms are 5-10 years etc… that you will fully purchase the units at the end of the term.???
I just don’t see, if the units are sound and the cash flow is there, why this WOULDN’T be a good deal for a beginner like myself.
I mean, in theory, couldn’t I just acquire some of these properties, hire a property management company for 8-10 percent and have them worry about vacancies…
That’s my question guys and gals… WHY WOULDN’T I DO THIS…
Oh yeah…also… would I just get a conventional loan at the end of the contract from a bank to purchase the property…
Thanks,
JCinIN
JC,
Yes, this is what they are saying. Ususally, they will “tote the note” for some period of time as you indicate (5, 7, 10, 20, or even sometimes 30 years).
They will do this for several reasons:
(1) They can defer the capital gains and only pay gains as they receive them from you instead of in a single lump sum,
(2) They continue to receive a monthly cash flow against the note from you and don’t have to deal with ANY tenants, and
(3) They get greater than bank interest on their investment.
As you indicate, insure that there is a cashflow! Otherwise you have an alligator eating directly out of YOUR back pocket.
At the end of your contract period with the owner, you would need an alternative financing source for the mortgage. Keep in mind that if it is 5 units or more, you will probably need a commercial loan…
These can be a spectacular deal given the right circumstances…just do your “due diligence” as you should with ANY property.
Keith
Thank you keith… Believe me, before any of my ink hits the paper, probably every one on this board will know what kind of deal it is. I just want to get started. The deals are out there. I am definately learning and all you and others info has greatly helped me…
Thanks again for your response… You kind of confirmed with me what I thought about financing at the end of the contract. I guess I will just call my bank to see what they say…
Any other suggestions or stories…
Jc
If you want to keep the specifics ‘close hold’, you can always e-mail me…I’m in Louisiana and only invest here. I will help you if I can.
My wife (my partner in ALL things) wants to “see, touch, feel” – she’s new to this and uncomfortable still but is making progress – she is now seeing the investments starting to make money…our income from rentals is about to surpass her monthly income from working!
Keith
Hey Keith…
Forgive my newbie ness… but what doesn Close Hold mean???lol
JC
Not a problem…
Close-hold means to keep the details to a minimum so as not to tip off others as to what the exact property is…
Te exact meaning is that you are holding the details close to yourself and not broadcasting them to a larger audience…
Keith
Would this transaction be similar to a lease purchase agreement?