This is the ‘Front Yard Stink’ house. Named so because my wife was disgusted by the smell of the house even though she was standing in the middle of the front yard and I had just opened the front door. You could smell it from that far away. We closed this one Wednesay.
I was considering wholesaling this one, but decided to fix it up and sell it with owner financing instead. The seller had agreed to owner finance the house amortized fully over 3 years at 5% interest. We paid all closing costs including agreeing to pay the property taxes for 2011.
I am still working up the scope of work and getting bids for this job. The post will be updated with the scope of work and details as soon as they are ready. Sorry to keep you waiting.
[Source: Absentee Owner Postcard]
This is a 3 bedroom, 2 bathroom, 1000sf house that was built in 1977.
|Settlement Fees:||$1,271 (title policy, closing fee, insurance)|
|Resale Price:||$79,000 owner financed|
Still being worked on… Will update soon.
Still being worked on… Will update soon.
Next: Follow Along As I Open Up My House Flipping Business
Hey Danny – I think you are owner financing with the seller because you plan to owner finance with the buyer on the other end and if so your spread will be great than if you went with a PL? Looks like you’ll spend about $1,500 in interest over the 3 years with owner financing rather than $3,300 in interest & closing with a PL. Is that correct? If so, very cool.
Correct and correct. Much better interest rate with the owner financing on my side versus using private money.
One other question – how are you financing the rehab, holding & selling costs?
I am using my own cash for the rehab, holding and selling costs. Will recoup some of that with the down payment from the end buyer. For a house like this one, we will probably ask between $3k-5k for down payment.
[…] a good contractor and got our contract signed. He is starting work on the Front Yard Stink Flip House on Monday. I found him at a house that was being rehabbed. He already works for 2 other investors […]
So, deals like this are what you’re referring to when you talk about your retirement scheme? How do you structure your “mortages” to your buyers on these houses? Terms? Can you “short and sweet” the paperwork/title process for these deals in TX? If not, it’s ok. I would assume attorneys are a must on both sides…as my parents effectively “lost” the house they “bought” with owner financing because the seller owed back taxes, and there were “loopholes” in their handwritten contract.
We use wrap around notes when we have an underlying loan on the property that is staying in place (with full disclosure to our lender of course). We typically ask for 3k down and carry the rest at 10% over 30 years.
We do not do hood-top closings. We use the standard Texas Real Estate Commission contract and fill out the owner financing addendum with the terms. We have a normal closing at a title company and have the buyers get title insurance. This prevents what happened in your parents situation. Sorry to hear about that by the way.
[…] You can see the before pictures and original numbers in this post. […]
If you do a lease option and then sell your option to a lease purchase buyer…….should you or the the buyer get Title Insurance. Will it work with lease purchases?
Something else; have you found that all lenders of an underlying loan, when using a wrap, agree to to it? Or do some not allow it?
Sorry, but I do not lease option so I am probably not the best person to answer that one.
Regarding the selling with wrapping underlying loans, some will not allow it (probably more than will). But, the ones that will allow it are out there. I think it usually just boils down to them not being familiar with it and being scared by what they are not familiar with.
[…] Finally closed the ‘Front Yard Stink’ house. Here are the before rehab pictures and details. […]
Danny, What was the negotiated terms with the seller on this transaction? And why do you think they went this route?
They agreed to owner finance the entire purchase price (I had to pay closing costs, taxes). I ended up selling this one as-is for about $20,000 more than I paid though instead of fixing it up. The people that bought it from me were going to fix it up and live in it.
I think the sellers went this route because they didn’t want to ever deal with the house again. The last tenant was a complete nightmare. It happens a lot.