Combining Techniques - Posted by Steve

Posted by Bud Branstetter on December 27, 1999 at 10:36:49:

I want to be a little harsh on purpose. First, in many parts of the country HUD properties are not good deals. A minimal deal is when there is 20% or 10-15K profit after all the costs are included. If you use all cash you should be buying at 60% of ARV. If you borrow money you now have personally guaranteed payment with everything you own. If you put the typical 20% down for an investor property and then put money into paint, carpet, and whatever it is still hard to make much return on your money. It also stops you from doing anymore deals until you cashout.

They you say L/O and owner financing. These are somewhat contradictory. Selling on a L/O is intended to get you money at a future point. Owner financing is like buying a note without a discount. You are investing your money at the prevailing rates. Even if you charge more the return on you cash is low compared to what is available if you are a little more creative. You would also have to know how to deal with that underlying non-assumable loan you took out. If you bought right and have the profit built in you do not want to leave it, your down and your rehab costs. You want to find a good mortgage broker and see if they can get you cash by getting the buyer a new loan. L/O and owner financing are considered when they buyer has some other problem. They are a softer form of selling.

Combining Techniques - Posted by Steve

Posted by Steve on December 27, 1999 at 10:11:44:

I am a newbie and am trying to purchase my first property with intent to rehab then offer for a L/O. My plan is to then hold the note and offer owner financing. Does anyone have experience with combining these techniques?

I am looking for the property on foreclosure lists (VA / HUD).

Re: Combining Techniques - Posted by Glenn

Posted by Glenn on December 27, 1999 at 21:16:17:

Think OPM - Other People’s Money. Using your own money will drastically reduce your ROI. Using a small portion of the money you have will increase your ROI at the same time it reduces risk by spreading it out over several properties (each with its own positive cash flow) to make sure that you can survive one deal that messes up.