Re: REO Opportunity - Need Advice - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on January 24, 2002 at 21:43:49:
This sounds like a good way to go to get started. I would encourage you to buy only if you know you are not paying over market value. As Al Miller–(SO CA) suggested, get out there and evaluate the market value before committing.
Yes, the interest rate is high. But, if you hold the property for a year or two, you may be able to refinance for a much lower rate. Just be sure that there is no “Pre-payment penalty” on the loan. That would require you to pay extra money if you pay off the loan early.
Since you do not mention wanting to live in the house, I suppose you have your own living situation set to your satisfaction.
You would be well advised to approach a couple of local mortgage brokers and ask them what kind of terms they can offer you in mortgages. If you can do better with them, why go with the seller financing? Try to get a discount on the price since they don’t have to finance. At least $3K, I’d judge. If you can’t do better, sure, go with the lender/seller’s financing.
You ask about renting or lease/optioning out. Well, those are two different investment approaches. I don’t think anybody can tell you which approach to choose. Certainly not given the lack of knowledge about you and your situation. I personally favor long-term rental holding. But for beginners, it is often better to resell quickly and get the cash to work more deals. Long-term holding is much less work, it seems to me, compared to the constant effort to find and buy new deals. Then resell them. But, different people have different approaches. Some people do not like being a “landlord.” You might talk to some people who know you well and ask them, if you think they will be hones iwth you, whether they think you would do well as a property owner/landlord. Listen to the spedifics about you and your previous actions as possible predictotrs of what you would be like as a landlord. But make up your own mind. You might want to read through part of Leigh Robinson’s “Landlording” book to see if the business of holding rental properties is congenial to you or not.
Good InvestingRon Starr*