10 house package deal! Help! - Posted by Andrew

Posted by tmofa-IN on January 12, 2004 at 19:18:00:

Not a landlord,

Negotiate a price first, then look at options,ask if he would be willing to refinance to the asking price then you T.O.P?
Do a wrap-around mortgage. Ask if you could lease for 6 months to 18 months, then buy at whatever agreed upon price and put either nothing down (I’m going to use the money to fix up) as little down as he will accept. He gets a monthly payment but does not have to deal with the headaches.
Or long term lease split the profits and you manage them, he keeps the titles. You benefit and he benefits.
Just some thoughts.

10 house package deal! Help! - Posted by Andrew

Posted by Andrew on January 12, 2004 at 17:41:53:


I need some suggestions on how to structure/finance a deal I was presented with. A local investor contacted me and said he is tired of “dealing with” the 10 rental houses he owns. These properties were handed down from his father and he does not have the patience or the know-how to work with them. All of them but one are currently rented out through section 8 with a GROSS annual income of about 65k-70k. He is asking 250k for all ten but said he is willing to work with the price (a little). He is also willing to carry back the financing on the 250k for 10yrs @ 7% WITH 20% DOWN. All of the properties TOGETHER have a FMV of between 300k-350k. Some are worth less that 30k and some are worth more.

I do not have the CASH for the down payment and am not sure which would be the best way to go about getting it. I’m obviously trying to keep my monthly payment down to maintain a good cash flow and I would rather go 30 yrs than 10 to help with this.

Should I work with hard money for the down payment?

Try and go through a conventional lender?

I have bought several rental properites in the past but never 10 @ one time!

How should I approach this deal?
I would appreciate any experienced feedback.


Re: 10 house package deal! Help! - Posted by Andrew

Posted by Andrew on January 13, 2004 at 15:30:03:

Thanks for the reponses!

I’ll run the numbers again, and probably get some conventional financing with a seller carry back…

Thanks again for the help

Re: 10 house package deal! Help! - Posted by GL(ON)

Posted by GL(ON) on January 12, 2004 at 18:37:15:

Sounds like a good deal to me. That’s a GRM of less than 4 which is as good as I have ever seen. All you people who were disappointed when I didn’t like your high GRM deals, here is what a good one looks like LOL.

Do you have any resources at all? Cash, stock, other property that you could refinance? How much could you scrape up?

How about this for an idea. Offer him 0 down but tell him you will fix up the houses and refinance as quickly as you can, and cash him out. Put separate mortgages on each house, fix up the best prospect, get an appraisal and a new mortgage and pay him off. You could end up with say 5 or 6 houses with conventional mortgages and the rest free and clear.

Or, could you get a conventional 1st mortgage now, give him the cash and have him hold a second for the balance? He is only asking for 20% cash, if you mortgage them you could give him 50% cash or more.

I’ll bet if you offered 10% down you would get them, maybe even less. You give so few details it’s hard to be specific. We don’t even know what state you are in let alone the city. But I bet it’s not California at those prices LOL.

Re: 10 house package deal! Help! - Posted by Chris Sullivan

Posted by Chris Sullivan on January 12, 2004 at 18:10:36:


Consider the rent credit and security deposit credits. If you can expect a full month’s rent at closing for each property (close them on the 1st) and you get one months security on each credited to you, in your case it sounds like that could equal 14K or so. You may consider using that as a part of the downpayment. Remember, though, those security deposits may have to be returned when tenants leave.