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I’ve got some notes from homes that have gone well and some that I’ve had to take the house back.
I’m trying to not make the same mistakes again.
Does anyone else hold the note on properties? How much do you get down and what percentage work out well? Meaning continuing to pay their payments, take care of the property, etc.
I was thinking about taking the pink slip on a car/boat/motorcycle PLUS get down payment money. I have the type of properties (blue collar working class) that most people don’t have a LOT of money to put down and credit that is shakey.
Has anyone tried this and did it work out?This last property that I’m getting back I got 5K up front and the people never missed a payment until they decided they wanted a nicer property. Now they are just walking away from payments, taxes, insurance with me holding the bag. This is getting riduculous!!
In Texas we can’t garnish wages…they just walk.sorry for the rant but I’m trying to figure out a better way of doing business.
Thanks for listening.
Dee,
I hold the note on many houses.
For me, the KEY to success is to only do median prices or higher for rentals or owner finance properties. they pay on time and stay for years and years while taking care of the property. I usually get 5% down unless I do a highest bidder sale for the down payment then I get 10% or more down.
When you deal in the lower priced homes, you’re dealing with people who don’t have any money, you’ll have more collection problems and more people who just walk away.
If you get a car or boat what are you going to do with it? Take your time to try to sell it? This is not the best use of your time unless you have a ready source to buy this stuff from you.
Remember, if they are first time home buyers they can get a check for $8k from Obama if the house is worth at least $80,000. That money can all go to you.
Jackie
Thank you for answering.
The houses I have are all nice houses. Houses that I would have lived in when I was first starting out.We remodel them, paint, flooring, kitchen and bath nice.
I guess I’m just fruastrated in that ** I ** never would just walk away from a debt. Now days it’s hard to understand the ones that do. I’m getting to where I don’t know the lies from the truth.
This last guy had repairable credit…I don’t sell to anyone that isn’t *close* to getting a loan.
I’m also deep in the heart of the oilfield and SOME of those people are a different type.
I hear what you are saying and thank you. I think I will start buying up!
Of course, the “McMansion” of mobile homes is a doublewide on land. These buyers tend to pay on time and stay put too.
The economy is creating problems for people who would otherwise always pay on time.
One of my long time tenants ( 9 years) has always paid on time. In the last year he is paying later and later because he “says” he is having a hard time collecting on the invoices he is turning in. He owns his own company that puts in fiber optic lines and bills cities and companies like Verizon. He does keep the communication lines open but that’s not the same as CASH. When Verizon and a city are paying late, we are all in trouble.
As the economy gets worse – and it will – we all need to prepare for more slow and no pays.
One way to offset the problem is to buy where there is no underlying loan. You can do that by bringing in a partner who puts up all the money in exchange for 1/2 of the equity when you sell later. Or by buying with seller financing with no payments for a few years.
This will give you a lot of flexibility and relieve the pressure.
I buy discounted seller financed paper and have found that notes with less than 10% down create the most collection headaches for me. I no longer look at paper that has less than 10% down (unless there is a 12month+ pay record or very good credit). Also, payors with credit in the 500s will give you many headaches. Paper with less than 10% down and poor credit has very little market value.
Greg
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