What is Seller Financing?

Seller financing is simply the art of getting a seller to finance a real estate deal. In this case, the seller is the bank.

They will negotiate a down payment (if any), they will allow you to make payments to them at an agreed upon rate and length of time, and you can even negotiate the interest rate (if any).

Have you noticed the theme here? Everything is negotiable and there is NO banks involved?

That means you don’t have to go through a mortgage approval process.
That means you don’t have to make large (if any) down payments.
That means you can find rates and terms that make sense for both you and the seller.

What is really cool is that the time in which you can get one of these done is a couple of hours to a couple of days. That’s it!

Yes, you could start looking for a house in the morning and by the end of the day, own it without going down to a bank and signing personally for a loan.

This is what makes owner financing so powerful, so amazing, and a strategy that you’ll need in your portfolio of offers.

How To Use Owner Financing As An Investment Strategy

The purpose of this strategy is NOT to take advantage of the home owners. It is to create a win-win-win situation where you help the owner sell their house fast, you make a profit, and the person buying the home from you gets a house that they didn’t have to go down to the bank to qualify for and with much less cost.

If you start making deals where only you win, then you will find it hard to succeed, and your business will be tough.

How Seller Financing Ties Into No Money Down Deals

Please listen to this tip: What is going to set you apart from those “other” types of investors is that you will not have to put any money of your own into the deal, except an earnest money deposit, but you will be able to give the sellers a good deposit if and when you sell the property.

How?

Here’s an example: Houses in North Dallas are worth $240,000. Let’s say that your seller is behind 2 months on their payments for a total of $4000 and they need $1,000 moving money.

So, you decide to give them a $10 earnest money deposit and a $5,500 down payment (being nice). Remember, the down payment only comes when you close the deal, not before.

You would then market the house, “Owner Will Finance, No Banks” and some other jargon. What you are looking for is a buyer that has at least $5,500 plus whatever profit you want to make.

So, let’s say that you want to make $10,000 out of this deal. You would just need a down payment of $15,500.

To come up with a $15,500 down payment for a house that you don’t have to qualify for is nothing. Remember, there are other options than having to go get a loan in which most banks, especially nowadays, want to see 20% into the deal. That would mean, traditionally, they will have to come up with $48,000.

So, there is no heckling on price, or the small things. They are getting a house for almost nothing and without all the red tape. Then, when you close the deal, the buyer will bring the $15,500 check or roll of cash (I don’t really care), and the seller will get their $5,500 and you will get $10,000.

Everybody wins and nobody had to be taken advantage of…And with the rate of foreclosures as high as it is now, there are lots of people who are motivated to sell there homes, but that’s not all that creates motivation…there’s relocation, job loss, drop of income, death, too big, too small, making 2 mortgage payments, or they just really want to sell.

So, go out and start creating “Winning” deals.

Then, you can take your baby on a cool date, and get back to work.

To Your Immediate and Lasting Real Estate Investing Success,

Kenney

P.S. Check out this post that will help you to turn your Owner Financed Deals into cash in 30 days.

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