So, you both agree to these terms: A 30-year note, which amortizes over 30 years, and balloons in 5 years. He’ll only have to wait a little longer for it. So with this financing option, you’ll explain to the seller that by him simply carrying the paper, he’ll get a huge return – $20K more than what the other guys were offering. Who’s the seller going to play ball with? We know the seller wants $150K, and let’s say 3 other investors have come in and offered $130K or $140K – but you outmaneuver your competition by swooping in, and through creative financing, you’re able to offer $150K. See, not only do you have to consider your seller in this situation you also have to think about your competition from other investors. Would that be something you’re interested in? I mean, I do have to work it out with my partner and we’d have to structure the deal a certain way, but if you’re interested, we’re willing to put in the time and energy to see what’s the best creative solution we can come to, so you are able to sell for $150K.” I’m thinking that we could do a loan, where you carry back the paper. Seller, $100K cash OR I could talk to my business partner, who might be willing to figure out some creative financing options. Knowing this info, you’ll then go to the seller to negotiate: If we did a rent-to-own, we could likely get a down payment of $2,500 to $7,500 (maybe even more), plus the rents as the option deposit.I ask the seller how much they think it will rent for.Let’s take a look at how our seller financing scenario might play out with some of the figures… The terms of your note are whatever you and the seller agreed to.Ĭommon terms for seller financing include a 5 – to – 15-year note duration, but I also do 30-year notes this way, too. They place a lien on the property at the close of escrow. The seller acts as the bank, that’s their role in this deal. This funding strategy is also known as owner financing or seller carryback. See, they own the property free and clear and they’re not selling it for a penny less than $150,000.Īt this point, we take a look at doing this deal with S eller Financing… No Loan on Property = Seller Financing Although, we will discuss another strategy for a mortgaged property below…) So, no loan and you’ve offered $100K, but the seller wants $150K. (As a side note, if there was a loan, you’d likely do a subject-to deal. Let’s start with an example for which the property we’re looking at doesn’t have a loan on it. Let’s dive right into discussing alternative funding and a couple of creative options for funding your real estate investment deals. Hey there investors, Cody here and I want to focus this real estate investing article on Strategy and Funding for your creative real estate deals.
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