I received e-mail:
“Jon,
I am reading your blog and I am interested in these condo-hotel units in Daytona Beach area. Prices seem to be very attractive.
You say that the Lenders do not finance them. What about owner financing?”
Excellent question.
Big banks never financed Daytona Beach Condo-Hotels. With 13 relatively small condo-hotels in the area, this is such a tiny niche for the Lenders. Small lenders who specialized on condo-hotels were the first to go belly up when the housing crisis knocked on our doors.
Today there is practically no financing on condo-hotels, except those larger units with full kitchen, which is a rarity in condo-hotels.
As for the owner financing, there are not many choices. Best priced units are foreclosures and short sales. You can’t get owner financing on short sales, and it is very unlikely to get it when buying a foreclosed unit, unless it is a Freddie Mac property.
There are very few people who do not need the money, and are willing to hold the Note. They understand that if the market improves, they will be disadvantaged, as they would not be able to change the price.
So, even if you find an owner willing to finance, they usually want asking price, plus a very sizable down payment (often 50%).
They understand that between the Association dues, property taxes and mortgage, there will be not enough income, so if you finance the condo, you will be bringing money to the table. It makes it a risky arrangement for the Seller.
So, why would an owner go for offering financing? Some of them look at it as strictly business. They allow you to take over ready for you to default. And if you default in 2 years, well, you paid for their unit so that they did not have to, and time is working for them, as the values started going up. Plus they already got a very sizable down payment, which would help them go through a lengthy foreclosure process.
If you want to buy a unit with owner financing, you need to be ready to make your mortgage payments and not expect it to be paid from rental income. There will be better months, when you would get more money and get close to paying for everything, but there will be months when you would have to bring money not only to pay the loan, but even to pay your maintenance fee.
If you understand this and decide that this is what you want, here is my number: 386-405-4408
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