I have a Seller I’m working with who owns a rental house next door. He wants to move out, he bought a lot in the mountains and does NOT want to be a landlord anymore.
Asking price 55000, friggin firm. I think that if I was going for the kill on the flat price I could do the “what if an agent sold it today”, bring up closing costs topic, and so on to bring it down to approximately 50.5k
My real question is any tips or strategies for talking someone into owner financing? This chap owns this property free and clear and I am most interested in this property for the cash flow. I know he doesn’t have the cash spent, I know he does not want to be a landlord, but he’s a bit old school and he got where he is by having firm principles and paying for things in cash (old oil field worker).
Any tips or trick on presentations or experiences with working with geezers with free’n’clear property? Is it just some people go for it others don’t? Of course, his interests are number 1, and when we meet again I intend to really see what he wants, but does anyone have any ideas on making a super-solid pitch for owner financing?
Or any other thoughts on this property and what I should do with it would be much appreciated.
It’s not a shotgun pitch. I don’t even see the answer to the most important question: “Why is he selling?”
What does he need the money for and when does he need it? If he’s just going to put the money in the bank, you can work with that. Then, you need to convince him why lending you that money is at least as secure as putting it in the bank. Think about this. If you were him and a buyer wanted vendor financing, what would you expect from that person so you would be confident that he wouldn’t lose your money and it would be at least as solid as putting it in the bank? For example, perhaps letting him put part of the price as a second mortgage on your other property with a lot of equity and showing him a proven history of making money with investing in real estate is what you need.
Honestly Nick I would tell you to just write a Contract showing owner finance. If you use your State specific Contract it should have a spot to just write it in as a owner finance deal. Along with that I would attach a spread sheet showing what the interest alone would pay him over the course of 30 years. Figure at 5.25% Interest over a 30 year fixed
$276.10
Monthly Principal & Interest
$99,396.67
Total of 360 Payments
$49,396.67
Total Interest Paid
So Instead of making $50,000.00 now he would make $99,396 and create a residual income. Just put it in front of him EVERYTHING LOOKS BETTER ON PAPER… Worst thing he can say is NO! Talk is cheap put an offer in front of him and let him know you are serious.
Motivation: he is a retiree. This property sits adjacent to his current home. He just bought a lot up in the mountains and wants to move out there full time (“my family can come visit me”. It’s one of those situations where it’s like, “Nick, I don’t want to be a landlord anymore!” then it’s “I’m old enough and been waiting long enough I can wait” as the doubt rolls across their eyes considering there’s about 250 properties for sale in this tiny town already.
I do need to build this up as an investment. I do need to show why it’s more secure than a bank.
Points I will make:
-Show what he will get, after taxes from 55000 upfront.
-----his price is that way because he spent 35k and put 20k into it. After taxes he won’t even get 55k so it should prove his price silly
-show the benefits, tax and otherwise, of locking this property up as an investment that will gain him interest
There’s a couple situations that I’m in where it’s older folks who have a free and clear house, they want to sell it and move on but this market has way too much inventory.
Sounds like this is getting pushed back because of the July 4 holiday.
Getting closer eeryday.
A MOST SINCERE appreciation goes out for everyone who contributes on these forums. Getting into this is pretty wild but I see a light at the end of the tunnel, I swear. I also got $500 on the table for a good mentor with references who wants to talk to me for an hour per week in July so I can get a deal done, paid up front. three oh seven two five oh four nine one zero or email me.