Using paid off rental house as Down Payment on MHP or Apartment complex

I own a rental house that is paid off. It is a brick house 2000+ sf and is currently rented for $825.00 per month tax value is 99K. 5 beds and 2 Baths. Current renter has expressed intrest to me about owner financing the house.

I would like to use it as my down payment on a small MHP or Apartment complex with the owner carrying the rest of the note. Does anyone know if a deal like this can be done and is it something a owner would be willing to do.

Talk to a local bank.

You need a local bank to set you up with a home equity loan on your free and clear property. With that you will have a cash down payment to offer the MHP seller. THey might carry the balance with a decent cash down payment.

Good thinking, you can do this deal without a bank potentially, but it will require a bit downpayment from your tenant buyer which may not be feasible. Double check if your tenant will qualify to buy the house traditionally to provide you with all cash coming out, then you could do a 1031 exchange to save taxes and apply to your purchse of a complex or MHP.

Can you add some detail so I can it clearly?

You have a F&C house, selling to tenant and you are going to carry back financing you. How much down payment are they able to pay you?

Have you found a MHP or apartment complex with seller financing you like?

Jim

I am not sure if i am going to move forward with me owner financing my free and clear home. I have found some MHP and Complexs the the owner is willing to finance but i need the money out of my rented house for the down payment. I was really just wondering if someone has seen a deal like that done before.

If i move forward with the owner finance they can come up with 10%. Which my selling price would be 85K. I am weighting my options since i only paid 23k for the property and have about 9k in rehab. I would really like to get the most bang for my buck with this property. I would this house to be my stepping stone for moving forward as a successful real estate investor.

Back to my original post

Jerrym,

Why sell the property, If you get a loan for 70-75,000(75% of appraised value of the rental property) you will have the money to buy 2 or three cheap houses, or make your down payment on the appartment you are wanting to buy.

Right now you are making $8-9,000 net return per year on the rental. Why would you sell that good of an investment.

In 2003 I had 3 cheap rental houses paid for. I took them to a bank and got 3 HE loans. Used that money to buy several more. Then borrowed against the new free and clear rentals. 10 years later by leveraging properties and adding dollars as I could, I have 1 quad, 3 duplexes, and I think 50 SFR’s.

If you sell the house you will have a rather large capital gain and the annual $8,000 in net rental income will stop.

The most bang - Bank loan against the appraised value. Keep the house.

For that matter you could get the bank loan then sell the house on a rent to own to the tennants. I am not a big fan of rent to own deals. If the house is a good rental and I am making a good return, why sell it. Right now your gross return on your investment for the rental is 30% per year. I would not sell that.

arlanj,

Thanks a Million i will look into a He loan. I was thinking that was the best option but want to see what folks would say. I was not aware i could do a rent to own when i o money on the property. Thanks Again Jerry

You can do a rent to own.

Just make sure your HE is paid off before the Rent to Own pays off.

I would still keep the house. Rent to owns can be a disaster.