I’ve done some marketing and most of my responses have been from duplex owners who have renters in place some of whom have been open to seller financing of between 70-80% which basically isn’t much better than what I could get with a no-doc type of loan as far as the down payment is concerned. I could do one or two like this but with this much of a down payment it wouldn’t be a sustainable strategy unless I was making some cash the same time to maintain my cash reserves. So unless/ until I can get someone to finance more to allow me to buy and hold one of these I’ll need to figure out how to flip these somehow. So I’m thinking towards options.
I’ve read a bit about these but not where there are already renters in place. Is it just a matter of taking over the existing leases as sub-leases and waiting out existing leases then either converting them into tenant/buyers or replacing them OR. …
how about keeping them and the option for myself to eventually acquire the property to hold myself?
Suppose I don’t want to get in the middle of all that mess, at least for now as I’m new. This way I could offer the seller an attractive(5-10%) non-refundable option fee so they know I’m serious and they continue their ownership without me in the middle and as long as I negotiate a low enough purchase price I can then find a buyer and squeeze out a little profit for moi. Or…
Something I’ve read little about but apparently it allows the seller to sell to otherwho without having the option attached to property this way I can negotiate a minimal option fee and pursue #2 strategy above with less risk.
So these are my ideas with the responses I’ve received mostly lately and any comments corrections or suggestions would be appreciated. Or maybe I should just forego these and hold out for more distressed sellers and/or properties? Thanks
I’ve had the best results finding properties which are vacant, rather than properties with tenants…the good part of your posting is ‘out of town’ owners…they certainly can have motivation to sell and/or accept unreasonable offers by investors…however, when you add vacancy, that is where I find sellers who are motivated far enough to consider unreasonable offers such as:
‘subject to’ transactions;
‘no money down’ transactions’
‘you pay me for taking over your bad position’ transactions;
long term lease purchases.
With a vacant house, now the average seller is making 2 house payments, has concerns about violating insurance requirements on the vacant house, vandalism, vagrants, maintenance/taxes/insurance on the vacant house, and so forth. I am the only game in town, sometimes, for a seller to get rid of his problem.
Before I make unreasonable requests, I inspect the house (hopefully with the seller present) and build a relationship with the seller so that he will have the confidence in me to solve his problem. After that, I point out all of the problems…slowly and painfully…one at a time, that this guy is experiencing owning a vacant home…then offer a solution…one of the 4 listed above.
If I have filtered my calls on houses well enough…this will be a real ‘don’t wanter’ and he will likely agree with allowing me to take over his bad position in exchange for me stopping the financial bleeding on this vacant house.
Then, I re-market using the terms ‘owner finance, no credit check’ which could be written as a L/P, land contract, or any other agreement that is lawful in your state to fit the terms you have available.
My price is marked up, even if the appraisal doesn’t match because I’m selling 2 products together in one package…a home…and…approved financing terms to the buyer…cash up front, cash monthly, and cash on the back end when your contract requires them to refinance and cash you out.
Thanks Rob. Yeah my prospects just haven’t had enough motivation. I’m like right there with some of them and I also have to keep working them just in case and especially until I get to the point where I’m getting calls daily. So for now I’m just practicing and getting more knowledge of all the different possibilities that may be in front of me. Like I’m currently looking into flex options to allow less than really motivated sellers to sell elsewhere but i still get the legal ability to market the property for an agreed price. At least that was what I read. Have yet to consult a lawyer but it sounds straight forward enough.