Any of yall owner-financing out a house right now?

[Frank]

...curious

Looking into possibly doing this soon.

[jw33]

Hell the motherfuck no.

[juiceweezl]

Hell the motherfuck no.

Since there's no like button, THIS!

[The King]

[ ] Would Do
[X] Would Not Do

[svauto-erotic855]

I own a bunch of little crappie condos up and down Skillman Lane South of 635. Over the years I've tried doing owner financing a few times and it's never really worked out for the buyer.

[Labora]

Sounds like a terrible idea.

Just think if they bounce on the loan you are on the hook to rehab the house for resell and you made nothing but down payment and however many payments along the way.

I'd say maybe with a FU # on the down payment but I'd expect if they are asking you to finance they probably have no credit or cash.

The other bad thing is let's say something happens and you need the cash from the property right away you are more than likely out of luck and tied up in payments for however many years.

Sounds more likely to get a negative outcome than be worth whatever interest you might make from financing.

[Broncojohnny]

There is a reason they can't get a loan from a bank and it isn't because they are good people who are down on their luck. There are plenty of good people who just can't handle their money correctly.

[svauto-erotic855]

There is a reason they can't get a loan from a bank and it isn't because they are good people who are down on their luck. There are plenty of good people who just can't handle their money correctly.

I know quite a few people that have cash businesses and they can't get a loan because of low or no declared income.

[Broncojohnny]

I know quite a few people that have cash businesses and they can't get a loan because of low or no declared income.

Then they are idiots

[bcoop]

It’s not as scary as some of these folks would have you believe. As with anything, do it properly and you’re fine.

-You need to use an underwriter to make sure you’re Dodd-Frank compliant. I’ve seen people lose in court over improperly calculated ability to repay & out of norm interest rates. The fee they charge is nominal in comparison to losing in court.

-You can only do 1-3 per year. There is legislation floating around to allow up to 24 transactions per year but it hasn’t been passed as of today. Look up seller finance coalition and HR 5614.

-Common terms are 10-10-10, 20-10-10. Obviously with that in mind there is a home value cutoff where I personally would not carry the note if it was over x. I would originate it and I would sell it. I would consider seasoning the right borrower then selling it if need be.

-I would really prefer to sell partials on anything I originated.

-There is a specific market I would target rather than just anyone with a hard luck story and poor credit score.

-You’ll want to hold the down payment in reserve for potential legal expenses, foreclosure, etc.

-You need to be prepared for additional expenses like servicing fees (you’re not going to service this yourself), boarding fees, force placed insurance premiums if they stop paying homeowners insurance, taxes, etc. don’t forget your accountant, cost of bookkeeping (mortgage note bookkeeping is a fucking chore), etc

-This is probably (definitely) too much for your average joe to handle as a one off, but if you’re dead set on it, I can point you to some resources and contacts. If you just have money to burn I can put you with someone (or several) that deals in debt for a living. I’ve been going down this road for a couple years now, building a business in buying mortgage debt but I am not ready to take on outside investors yet (and hopefully won’t ever have to).

[bcoop]

Then they are idiots

Far more common than you think.

[Broncojohnny]

Far more common than you think.

Of course it is common. It is also common for the IRS to fuck them to death if they get caught. Back to the topic at hand, I certainly wouldn't owner finance a house to them.

[bcoop]

Of course it is common. It is also common for the IRS to fuck them to death if they get caught. Back to the topic at hand, I certainly wouldn't owner finance a house to them.

I’m just saying, it’s done every day all across the country. Quite successfully I might add, if one knows what they’re doing. While a borrower can just get up and walk away, the underlying collateral can’t (as long as we’re not talking about mobile or manufactured homes here). And I even know several folks that all they do is mobile/manufactured but that’s a different animal. Still highly successful but the risk is higher and thus takes more capital to spread the risk out amongst more units/notes.

[svauto-erotic855]

Of course it is common. It is also common for the IRS to fuck them to death if they get caught. Back to the topic at hand, I certainly wouldn't owner finance a house to them.

Every property I own is held by an individual LLC. You don't owner finance the home; you sell them the LLC on payments and you carry the note. My issues with owner financing have been caused by life; divorce, going to jail, one guy even died.

[Frank]

This is a home I own outright in SE Dallas. Inherited from Mom. 90% Hispanic hood. Its a 2/1 brick, p&b, that has an additional closed in porch which could easily make into 2 more bedrooms if it were sheetrocked, etc. HUGE back yard with big trees. Tax value about $65k. I have a standing offer for $85k sight unseen right now.

The house needs more work than I think I want to put into it if I were to try to rent it, not to mention I hear Dallas rent codes are a bitch. Built in 1956, it only has 2 circuit breakers. Anyone here with such experience? Who has rent houses in the City of Dallas?

I was thinking selling it "as-is", $100-$120k, 9.5%, 30y, 10% down. The terms are what they are because the buyers are likely of little-to-no or poor credit history. After 60days behind on a house payment, deed returns back to me and I foreclose. Really no different than selling used cars off a tote-the-note lot except I don't have to hunt down a car to recover it.

If they burn it down or wreck it, its insured. If they don't, the improvements they make are just icing on the cake.

I'm trying to decide whether to create an LLC anyway as I have a rent house in Mesquite and plan to acquire more. I'm thinking it is time to get better organized.