Welcome back everyone. Today we’re going to be diving deep into an incredibly useful strategy called creative financing.
Whether you’re incredibly seasoned or a newbie, this strategy can unlock a lot of doors and a lot of potential deals for you, as you do wholesaling in real estate investing, stick around, because by the end of this video, you’re going to grasp the fundamentals of seller financing, learn how to find seller finance opportunities, and watch me talk to a seller and present some seller financing options to them and see exactly how it’s done. So let’s start by breaking down what seller financing is. So what seller financing is, is it’s using the seller to finance you when you’re buying their house, usually, you can buy a house or traditional financing, which is a bank.
And that’s what most people know, they know they can go to a bank, the bank will give them, you know, a loan, a mortgage, and then they can pay, you know, put some money down. And then they can pay certain amount of interest over 30 years. And that’s what people understand. But seller financing is it’s using the seller to do be the bank simple. So if the seller owns their house outright, you can go to that seller and say, Hey, instead of me going to get a bank loan, will you finance me? Will you sell me the house and then the seller could say Yes, bring $50,000 down, you know, 3.5% Right now it’s like a percent and over 30 years, okay.
The cool thing about creative financing is it can be whatever the heck you want. That’s why it’s so powerful. Such a powerful tool because you can structure anything that you want to do. So seller financing intrigues, you don’t forget to hit the subscribe button. So you can get more content like this. So finding a seller that’s willing to do seller financing or subject to can kind of be like looking for a needle in the haystack.
So how you do it, if you want to work with sellers that own their property outright, you probably look for properties that are free and clear people that own them. So if you pull that list, you can definitely do that on batch leads, and using other softwares. So that’s how you can go search specifically for seller finance deals, if you want to look for people that are willing to do subject to properties where they have a mortgage and you take over their payment, that’s a little bit more difficult. There are different strategies on how you can do it. But the way I do it is I always offer a seller finance offer or creative offer on all the offers I do. And that’s why I suggest everyone does. If all you’re doing when you’re talking to sellers making a lowball cash offer, you’re you’re just pretty much destroying all other opportunities.
If that’s all you do, there’s so many different ways to work with sellers, you can work with them on Novations, you can list it in their behalf, you can, you can refer them to an agent, you know, and they can work with the agent you have. And they can give you a referral fee, you can do terms like we’re talking about right now. So what I think in the best way to find opportunities for seller finance is just offer to everybody, there’s no reason why you wouldn’t. So when you present a cash offer, if they accept great, but you can also say hey, if you like that this is also what we can do.
. Let me know which one works better for you. I wouldn’t say there’s like a magical list or you can find those opportunities. So what I suggest just offer to everyone you talk to that wants to sell their house look enough for this talk. I’m tired of the app, and I’m going to show you exactly how I presented the seller financing creative financing options to this seller, we just kind of go back and forth. That’s the cool thing about seller financing creative, you just ask them if they’re open to it, then you explore options.
So let’s dive right in. You know, those are the options that I can see it the best option?
I mean, I would consider some sort of seller financing potentially
Well, considering 304 is where I’d like to be on a cash sale? Where would it make sense for you if we’re able to structure something on the purchase price?
I mean, it’s it’s gonna probably be beyond your reach? Because I mean, if you want the house, basically, I mean, how much are you going to put down for seller finance
and it’s a good question, because most of the money that I would put down, I would put, I would like to put into the house, you know, instead of like, putting money down into your pocket I’d like to put into the house. And obviously, if I default, then you get you get the property that’s being rehabbed.
Right? If you’re, you know, initial numbers, 304. I mean, I’ve got offers for 10 cash. So I mean, for me to carry it for a year, I’d have to be at least 450 to make it to make sense in which I understand completely, and other than a few. I mean, based on your numbers, you know, you’re gonna lose money. If you put 85 into it. You’re able to sell it for the 450 plus the 85.
So exactly. So trying to think yeah, 480 maybe five, I was thinking Max, I’d like to be conservative Max would be like 510 on the on what you could resell, but you’d have to do a really good job. Yeah, so Well, if you got for 10 I would love to just be I guess be be available in chat. I would have to come up obviously off of three or four but other than the cash offer, I know you’re probably just going to explore what what those other guys offer because they’re much higher. But if you were to do the terms you’re saying for to make sense for you to have to be a considerable amount down at around 450 Not anything Less than 400,000, obviously, right?
I mean, it makes no sense to do less than 410. I mean, why would I want it to sit there for a year? Yeah. You know, so yeah, I mean, I would want enough down that if a person just walks away, that’s going to be painful for him.
eah, definitely. And if we were to flip it together, and I brought the rehab, if I brought the money, how would that look like to you? Like, would you be able to continue to make the mortgage payments, and I just do the rehab? And we kind of wish I could do something like that. Okay, and how would we? How would you like to split the profit on that, like, the what I got what I’m thinking is like, if your BEST OFFERS for 10, for example, I bring the money for the rehab, we split the profit above, maybe your best offer, if the numbers make sense. I have to run it. But I’m just trying to see,
I know that seems fair, like if you do the money, you’d get reimbursed. But yeah, I mean, I, that would be fair, if you brought the money for the rehab. I continue to make the mortgage payment, and we would reimburse you for your costs, and then reimburse me for my interest in taxes and insurance during that period. And then we can split anything above that.
Because that’s going to be probably the best way for you, I would assume like to make as much as you can off the property, right? If it’s a rehab, yeah. Okay, let’s do this, I’m gonna run my numbers. Again, I’m gonna dive a little bit deeper. Obviously, if interest rates go down, we’re looking at a different ballpark ballgame. But, you know, it’s hard to base everything off of that. And I have no idea.
Because it’s an unknown. The other thing too, though, is, I mean, I don’t know if this is appealing to you. But you know, if you’ve rehabbed it, we could probably rent it with a substantial deposit on a month to month basis for probably like, you know, 2500 to 2750, like a lease option, or something, or not even a lease option, just like if we’re worried about getting stuck with it, we could throw a renter in there for several months, just make them put a big deposit now. Or maybe just say, Okay, well, we’ll listen to you, but you know, their party can terminate was 60 days or 45 days, notice. Okay,
how would we structure that like, if I was able to get it back rent ready, get the tenant out and get a rent ready.
rather sell it I’m just seen as like a, you know, a safety valve, so to speak, got it. Got it. Let’s say you get it rehabbed, and we have sell it in two or three months. Then we said, okay, let’s throw a renter in there. 25 to 2750 a month. And, you know, either party can terminate with 45 days, and we’ll let the renter know, hey, it’s still going to be listed.
Gotcha. No, that’s not a bad idea. Yeah. So you’re not having to come out of pocket for the mortgage. And
exactly, it’s a little bit of a safety valve, then we can figure out, you know, whatever. Equitable split as far as you know, the rent that’s coming the weekend, the taxes.
And last thing before I let you go, if we were, if I come back, and we make sense to do the rehab, would you prefer doing that over a cash offer for 10? If we were able to rehab it together? Or would you rather go with the cash? And that would be
And last thing before I let you go, if we were, if I come back, and we make sense to do the rehab, would you prefer doing that over a cash offer for 10? If we were able to rehab it together? Or would you rather go with the cash? And that would be
I mean, again, it depends on the numbers. What’s the potential? You know, as opposed? I mean, if I can make an extra $2,000 No. I can make an extra 20,000. Yeah, then that’s something to look at. Does that make sense?
100%. Yeah, you’re businessman. What makes sense? Okay,
okay, I run your numbers, be in touch and we’ll go from there.
okay, I run your numbers, be in touch and we’ll go from there.
I appreciate your time. Thank you. No, I
appreciate your thinking.
So if you found that video interesting, go ahead and leave me a comment and like the video I’d like to hear from you. If you think that was a good conversation. Great. If you didn’t let me know. I’m always down to improve and I’ll see you on the next video.
