JRook,
You, like I, are stuck in the box of thinking of Owner financing. It was the first approach that I looked at and the approach I continue to use. If you plan on doing a deal that is profitable if you use owner financing, then it is extrememly profitable if you take them conventionally or FHA. Most of the buyers who qualify for the 90% programs that you mentioned will qualify for FHA loans and you don’t take any discount.
I advertise using “rent to own” and “owner financing” in my ads, but I am always looking for the person who can qualify for some type of bank financing. Most of the people that you can get a note sold on can also go to a bank and borrow the money. Good luck.
This question is regarding residential re-habs. I understand the process of a good re-hab plan, and also the cost involved with buying, selling, holding, sales cost, repair cost, and the max. purchase price.
We like to target around the $15,000 - $20,000 mark for our profit on these homes. The problem occurs when we go to sell the home when completed.
If we sell with owner carried financing we have our discount which lowers of profit margin substantially, if we have a real good buyer with good credit we can get a 90% LTV, but most of the time our buyer?s have less than perfect credit so with can go with a 82/13/5 program.
Is there any suggestions on what we could to, or are there ant better programs out there that we may be missing.
What I’m doing is working with a good mortgage broker. I show the house, and while we are standing in the kitchen I call my mortgage broker. He takes my buyer’s info. over the phone and runs their credit. Then within hours he tells me what kind of mortgage they could get. If they can get 80% LTV then I decide if I can live with that by taking a second, etc. If that is not good enough for the property, and yet I like the buyers, then I will L/O to them.
I want to do some serious volume so I feel like I do not have time to wait for the perfect buyers all the time. This winter I tried to market a house requiring that my buyer qualify for a 85% mortgage. I was having no luck, and decided that the 85% buyers had to many options out there. So I figured I need to do whatever it takes to move my houses.
I’m still learning RE every day, but my Dad taught me that if you can solve people’s problems then you will make money. I think of this whether buying or selling.
Re: Residential Re-Hab Question… - Posted by Tom Caruthers
Posted by Tom Caruthers on April 03, 1999 at 08:45:19:
Depending on what price range you’re working, most buyers with a job, manageable debt, and a year of clean credit, can get FHA financing. In which case, you shouldn’t be required to carry any paper at all.
How are you marketing your properties? Are you listing with a real estate professional, or offering them FSBO?
You might want to team up with a mortgage lender and real estate professional, who will work with you exclusively to pre-qualify your buyers/list your property in MLS, for a minimal fee. The agent may advertise your house to attract buyers, and the lender gets the loan.
The “Team” concept can work well.
Good Luck,
Tom C.
Granite Bay, CA
P.S. (Without sounding critical) Do you proof read your posts?