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Property #7

March 10, 2012

We finally talked a seller into owner financing. Our latest purchase was a property that my wife was managing for someone else. We tried to buy this home a couple of years ago, but the seller was not ready to sell. He was asking entirely too much for the property. He left it listed with a realtor for 3 months with no luck. Then Valerie approached him about property managing it for him as a rental. She walked him through the benefits of having a rental and explained that she had the knowledge and experience to manage rentals. He thought about it for a week and then accepted.  So for the last year plus she has managed the property for him.

Last month it became vacant as the current tenants were purchasing a new home. This is when the owner approached her about purchasing the property.  Valerie and I talked about it for several days and came up with a lower all cash number knowing he would not like it. She then approached him about owner financing. Valerie did a good job of educating him on owner financing and he was already familiar with getting a monthly check each month. We started him off with a principal only repayment plan (0% interest). He puked on this, but it did start the rate negotiations at the bottom. She ended up at 4.25%. So here are the specifics:

Estimated Retail Value: $120k

Total purchase price: $100k

Cash down: $30k

Owner financing: $70k at 4.25%

Rent: $1,135

Specs: 3-2-2.  1,834 sq ft. Built in 1976

The real bonus with this purchase is she found a tenant for the house while we were discussing the purchase. We closed last week and the new tenants move in next weekend. The last tenants left the home in great shape and we have almost no work to do.

This property is in the same neighborhood as 2 of our other rentals and less than 3 miles from our primary. I would certainly liked to have only had to put down $10k and financed $90, but the seller needed $30k. While this one does not have the returns of our Property 5, this one is in a totally different neighborhood class. This is a strong class B property and this is where we are aiming on future purchases. 

This was the easiest purchase we have made. We closed in an attorney’s office and the seller paid all the legal fees and we agreed to split the Title Policy as they wanted to go without one. This saved some money over those Title Company closings. Our total closing costs was $468. ($420 for Title Policy and $48 in recording fees)

Here are a few pics – I will load some more next week.

Related Post:

Property 5

One Comment
  1. Melissa permalink

    Chuck this is awesome, congratulations to you and Valerie. I am going to do more research on owner financing it seems like a good way to go.

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