Re: How realistic… - Posted by Stacy (AZ)
Posted by Stacy (AZ) on March 23, 2001 at 23:56:48:
It depends on your market. I’d love to be able to say it happens easily for every investor, but the truth is different than this. I’ve spoken to an investor in Georgia that has had a fair amount of success with this strategy. I’ve spoken to an experienced investor in Austin that accepts less than 10% for a wrap or owner financed sale, because he needs to move properties, and it could take months to get a buyer with $15,000 for a $150K property. But, he has a high incident of foreclosures on these, and simply accepts this as his cost of doing business in his niche.
I, myself, have had a pretty tough time recently in Phoenix finding a buyer for a $150,000 house with $15K or more to put down, who couldn’t just go and get a loan. And when they can get a loan, they can go for any other property in your town…yours is no longer special because of owner financing. I think if it was priced in the $60K to $90K range, I’d have had an easier time. The higher priced properties, $150K and above, are starting to slow down a little in Phoenix. So, maybe the lower priced homes are the way to go in this market.
Consider this. If you L/O a house instead, it would be easier to find a buyer, and easier to evict if they don’t pay. Also, as Jim Piper has been saying for some time, taxes are the greatest expense for many investors. If you L/O correctly, you have an opportunity to avoid or decrease these taxes significantly.
I really don’t know what the market is like in your neck of the woods, so I guess my suggestion would be to try a wrap sale if you want to, and if you’re not having any luck, convert to L/O. A conversation with your tax accountant would be a good idea, as well.
A property I just sold, I held for 10 months while rehabbing and finding a buyer. When I found an owner finance buyer with enough down, I convinced him to rent for two months so I could hold the property for a year, before closing on the sale. The tax savings is significant.
So, I guess, in my mind, I couldn’t tell you it will be a piece of cake to find a buyer with that much cash without knowing your market. But, we need to know many different strategies to be truly successful in this business. Knowing how and when to sell owner financed is one of the tools we need to know.