I was a landlord in Virginia for five years. Maintenance costs and renter headaches turned me off to it. I swore off real estate when I moved to TX. Fool that I was!
I got connected with a good mentor in San Antonio, who is teaching me the wonders of owner financing distressed homes. Here’s how it works -
I buy a house for $50,000 under my mentor’s guidance (he knows where to buy).
He finds me a qualified, owner finance ‘buyer’.
They pay me $800 per month per house.
I have ZERO repair costs or property maintenance responsibilities.
I pay tax/ins only (about $$2000 per year total). That’s it. No other expenses.
Bottom line: 16% cap rate with no repair costs.
Anyone else ever tried this? It’s a great system for long term cash flow. And Dodd Frank? No problem. You can do three deals per year. After that, you go through a loan originator at $500 per deal. I don’t care - I am making a 16% cap rate! I have pulled my cash out of the stock market and I am buying more of these houses every year as I can afford it.
Hi, here is a bit more info about what we do in SA -
My investment partner, is a highly successful real estate investor in San Antonio since 2002. Our investment focus is buy and hold of distressed, affordable homes. What we offer: long term cash flow with no repairs. The strategy is simple:
Investor buys an affordable home in a solid, blue collar neighborhood that we recommend (we know where to buy).
Investor buys the home for approximately $55,000.
Investor does not repair or renovate property.
We qualify an owner finance ‘buyer’ for the property with job/income.
Investor owner finances it for approximately $89,000.Get $3000-$5000 down.
Investor enjoys 15%+ cap rate returns annually with only tax/ins for expenses.
Default rates are low - less than 10% in five years. Deal can be redone with a new buyer.
My partner has been doing this for 10 years, and has all the angles figured out. He knows where to buy, how to negotiate a good price on the wholesale properties, and how to qualify buyers.
I advise getting a good mentor to learn how to do this. My partner doesn’t charge me. Also note, you don’t have to be here in SA to buy these houses. None of our houses need repairs or property management by the investor. I get 17% cap rates on all of mine.
He shows me how to do what he does, and guides me on which homes to buy and helps me put buyers in them. It works great. Let me know if you would like more info. My contact info is in my sig. Good luck all!!
Hi, I think if the contract is signed and we get the down payment, the deal is done and we keep it. Not sure if it ever happened that they wanted a refund when everything was signed and sealed.
That’s a damn good idea. I am doing the same thing myself here in Texas, after seeing other investors do it with great success. I will be doing about 30 deals this year that way. And if you buy very well (not just well) … and you can fix up & sell a house for 2x (sometimes a little more, sometimes a little less) what you got into it AND charge 10% interest … you can do even better. And correct - as long as you are going through an RMLO you’re protected.
Would owner financing work for a property that you still have mortgage on? Every time I hear “owner-financed” I imagine someone who bought the property for cash and has no outstanding mortgage on it. Am I wrong in my thinking?
I am interested in a mentor because I have limited learning time because I still need to work full time. Can retire in 17 months. Can’t wait but need to build this business so I can afford to retire! I am in Austin Texas. Thanks .
Would owner financing work for a property that you still have mortgage on?
Yes. You just have to “wrap” the mortgage around an existing mortgage. The original bank loan / deed of trust will be superior to the new one. Its done all the time.
Every time I hear “owner-financed” I imagine someone who bought the property for cash and has no outstanding mortgage on it. Am I wrong in my thinking?
No. You can do it both ways. I have the income & reserves to pay cash for properties, and by selling it for double or rarely even triple what you paid for it and charging 10% interest … wow … your HP 12C financial calculator likes that. LOL. Its easy to do if you buy properties OFF the MLS, and they are cheapie properties - $15-35k. Doing a wrap is a good idea too, but I personally do not like debt, so I avoid it with a 10 foot pole.
You will probably not find a mentor who will just give you all his/her secrets for free; that is something Armando Montelongo & the get rich quick guys pitch. Ugh. It does happen, but its rare. Your best bet is to read books on real estate & consult with people online and at local real estate clubs - they will give you some advice for free. Good luck.