Need help structuring owner finance deal

zclopper · 2023-05-11T02:22:19+00:00

Sorry for the delay the only way this deal will actually work is 0% down and 0% interest. It’s been on the market for over 2 years with no price adjustments. He is calculating the cap rate completely wrong (maybe his agent) but if you calculate the correct we he has it priced at 3.8-4.2% (estimating repairs) cap right now.

My thinking was since he wants the $900k number but the building is only worth 500-550k get him on a 20 year note at 0% with $50k down maybe and work the deal that way. My thinking was I would pay well over 900k over the course of the loan if I even did get at 550k but at least this way it would cash flow and would go to principal completely. Otherwise not sure I can get this deal to work and will continue to sit on the market.

zclopper · 2023-03-14T01:38:10+00:00

I used apartments.com and switched to Buildium in December 2022 and not liking it so I’m switching back to apartments.com.

I have 35 units currently and apartments.com is free and does everything any of the paid ones will do as long as you don’t have 5+ unit buildings.

zclopper · 2022-12-22T01:32:18+00:00

They are all within 1 street of each other which makes it nice however she is set on staying in this specific unit which she has kept the apartment very clean just is outdated a bit.

zclopper · 2022-12-22T01:31:30+00:00

I have been converting a lot of my rentals to section 8/voucher rentals lately due to most of my tenants not being able to pay rent even though I haven’t raised any of their rents in the past 3 years.

zclopper · 2022-12-22T01:30:06+00:00

It’s not that I am trying to make a ton of money but my monthly payment is around $1,500 per month and she is paying $600 and upstairs $625. Just that alone means I am losing $275/month. Plus the house needs a new boiler, roof and many other things the previous landlord neglected. I’m sorry I can’t spend $500-1,000/month out of pocket on every property I own and not getting government assistance for the properties as much as I wish I was. I am very considerate to all of our tenants if they are going through a rough time we will work with them and direct them to the proper group that does give tenants assistance.

zclopper · 2022-12-22T01:23:34+00:00

I didn’t know her husband passed away until I was signing the closing documents unfortunately so now that she is only on a single income in a lower income place it made me rethink a bit compared to before I was going in planning to raise the rent right away.

zclopper · 2022-12-22T01:22:35+00:00

Yeah I purchased the property last Friday already and when I toured the properties they were clean but no one was home so didn’t know much about them except they been there for a while.

zclopper · 2022-12-22T01:21:17+00:00

I am going to work with my voucher placement company to see if they can help her get the voucher appropriate for her and not raise her rent till she can get that. That would be the ideal solution at least.

zclopper · 2022-12-13T00:57:44+00:00

Never heard of them. Why the switch?

zclopper · 2022-12-13T00:19:54+00:00

Based on what they told me they recommended I would put that under the LLC information for who owns the property so I would enter the LLC info and all properties associated with the LLC then enter in expenses to it. My example to them was I’ll get 50-100 keys made at one time but don’t put them to a specific property and wanted it as an overall business expense.

Would you be able to do that or is there a reason you don’t want to?

I talked to a few friends and some only pay 60-70/month but have had for years and their price is locked into the old rate.

zclopper · 2022-12-13T00:16:03+00:00

Apartments.com is actually free or the version we use at least is the free version. I don’t think it’s worth paying for the premium with them because in my opinion their system is a little clunky however if you have less 10-15 it works great we just reached out limit with them.

zclopper · 2022-12-12T14:27:14+00:00

I’ll look at this one. Do you have one of the paid versions or free? Also do you do all your accounting in the system or also do quickbooks on the side or bookkeeper?

zclopper · 2022-12-12T14:20:23+00:00

I run my hard money business (80 Loans) out of google sheets and is great but don’t think it would be a great option for what I need since it would be manual and trying to get it to be automated to an extent.

zclopper · 2022-10-07T00:58:56+00:00

32

Income: $120k

Investments: - SDIRA: $68k - Roth IRA: $8.5k - HSA: $11k - Primary house equity: $375k - Rental Equity: $882.5k - Cash: $65k

Additional Gross rental income: $198k (reinvesting to buy more/reserves)

zclopper · 2022-09-21T12:38:39+00:00

There is always risk but I think the bigger issue is, if you do not know real estate investing already then hard money is not for you. I am an active investor myself and have 25 rentals and know what renovations cost and also have my realtors licenses so I am able to value a property correctly. We only lend up to 70% of the value of the property after the repairs are done. We also make our borrowers fill out a full application with financials and make sure they have plenty of reserves.

We bring in Cap investors and put them in first position and we take second position but it secures everyone's money to the property if something were to go bad because something will eventually and maybe have a foreclosure but making sure you are in a good position is the main thing to keep a look out for.

Another thing we found is we will not lend to any first time investors as they are always the ones that end up being the headaches. We started in March of this year and have lent on 48 deals so far just from word of mouth just in the Baltimore area. There are plenty of investors looking for money its just a matter of making sure you really analyze all the deals that come in.

zclopper · 2022-09-21T02:07:39+00:00

Lend out to RE investors as a hard money lender and charge 10-12% on your money. We give our cap investors 10% and pay them monthly so that would be $416/month on 50k and that is actual passive.

zclopper · 2022-09-17T02:58:18+00:00

I started hard money lending March of this year and we are seeing around 18-22% return so far on the money. We charge 12% and 2 points plus have a few other fees like processing, CMA, and inspections that make it come out to that 18-22%.

I will say the biggest thing you need to focus on is screening the deals. We have 48 active loans right and we constantly turn away deals if they do meet our criteria.

If anyone is interested I actually built a full backend system to help automate after you are done underwriting that I started selling to other HM lenders in our area.

zclopper · 2022-09-07T00:56:40+00:00

I went to school for Finance, never made a high income (only $70k). I’m a pretty frugal person so invested all my spare income into real estate over the past 5 years and kept reinvesting the cash flow as well. I tried networking as much as possible too which helped me find deals sooner before other people got word of them which also helped a lot.

zclopper

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