Posted by bob on March 09, 2006 at 19:16:58:
Thanks for the response dealmaker. I am not sure what is the best legal structure for a seller financing deal here in Minnesota. I’ll check with my RE lawyer. Mind you this is a 300k house where entry level starts at a little over 200k so I suppose I might want a little bit more than 2-3k (maybe 5-6 k).
Thinking of selling my rental on Contract for Deed - Posted by bob
Posted by bob on March 09, 2006 at 15:41:03:
One of my rental houses has a vacancy coming up in a couple of months so instead of filling the vacancy I was thinking of selling. I could just list it with my realtor but I have thought of selling on a contract for deed for several reasons:
I happen to own the house free and clear and I don’t need to be cashed out for 5-7 years. My thought is a 5-7 year balloon mortgage with 5-10% down at 6-7 percent interest. I am not real hopeful for appreciation during the next few years so I like the idea of receiving a steady check for a few years befor being cashed out.
So anyway…any thoughts on this plan regarding terms(interest rate, down payment ect) or marketing plan to attract good buyers? Or perhaps a better exit strategy? I plan to consult a real estate laywer soon to help with the details. Thanks in advance, Bob
Re: Thinking of selling my rental… - Posted by CHRIS IN FL
Posted by CHRIS IN FL on March 10, 2006 at 13:36:46:
HOW ARE LEASE/OPTIONS TREATED IN YOUR STATE, AND WOULD THAT BE A GOOD OPTION FOR YOU (SINCE YOU CAN HOLD FOR 5-7 YEARS)? I KNOW LAWS ARE BEGINNING TO TIGHTEN ON THESE DEALS. I HAVE TWO $200K HOUSES LEASE OPTIONED, AND, WITH THE RIGHT PAPERWORK (I ACTUALLY LEASE WITH CONTRACT FOR OPTION), THEY ARE GREAT. $5K DOWN SHOULD BE EASY, AND PROBABLY MORE. IF THEY DON’T PAY, YOU SHOULD BE ABLE TO EVICT INSTEAD OF HAVING TO FORECLOSE. IF THEY DON’T BUY, YOU SHOULD BE ABLE TO KEEP ALL OF THE MONEY AS RENT. YOU STILL OWN THE HOUSE, TREAT PAYMENTS COLLECTED AS RENT, AND CAN CONTINUE DEPRECIATING HOUSE TO OFF-SET RENTAL INCOME. ADDED BENEFIT: LEASE-OPTION TO DECENT TENANT-BUYER CAN USUALLY BRING ABOVE MARKET RENT AND SELL PRICE BOTH, AND YOU DON’T PAY INCOME TAXES OR OTHER FEES ASSOCIATED WITH SELLING (YET). TENANT RESPONSIBLE FOR MOST REPAIRS. OBVIOUSLY IF LEASE/OPTION IS OF INTEREST, DO YOUR HOMEWORK ON HOW THEY ARE TREATED IN YOUR STATE, AS WELL AS ON THE RIGHT WAY TO DO THEM SEALTIGHT. GOOD LUCK!
*ON ONE OF MINE, TENANT-BUYER, WITH PERMISSION, REPLACED POPCORN CEILINGS (2,500 SF) WITH KNOCKDOWN, PAINTED AND WALLPAPERED ENTIRE INTERIOR, AND UPDATED FIXTURES. I WIN IF THEY BUY, AND WIN IF THEY DON’T (THOUGH I WILL KEEP A FAIR PROFIT IF THEY DON’T BUY, I WILL WORK WITH THEM ON SOME REASONABLE REFUND AND NOT “KICK 'EM WHILE THEY’RE DOWN”, EVEN THOUGH I PROBABLY COULD).
Re: Thinking of selling on CFD - Posted by dealmaker
Posted by dealmaker on March 09, 2006 at 19:02:51:
I’m not sure what state you’re in but in my experience folks who can come up with 5%-10% down are usually bankable through “traditional” sources. In that case why would they want to put themselves at the risk of a CFD.
Why not do what I do, just offer the place for sale for a small down, in my case I advertise for $2K-$3K down. I so a straight up sale, 30 year amortization, 5-10 year balloon.
One reason I started doing this is because TX changed their laws about 6 years ago and it was just easier to do a sale than a CFD.
I usually chage 1 1/2 to 2% over “standard” interest rates. I’ve found that the buyers I’m attracting are “payment” buyers, not price or interest rate buyers.
Good luck.
dealmaker
Re: Thinking of selling my rental on - Posted by Gene
Posted by Gene on March 09, 2006 at 15:48:01:
I have sold a couple places this way. I sell the payments. I want 8 to 10% intrest (remind them that there are no points or fees like most).
Always ask for a little more than you will settle on so you have room to negotiate.
Gene