Flipping Houses

Bringing Sexy Back to Seller Carry Backs

110 Articles Written
seller carry backs

I’m sexy and I know it. Thank you LMFAO, a techno rock music group, for teaching my 9-year old daughter this catchy little tune:

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When I walk in the spot, this is what I see
Everybody stops and they staring at me
I got a passion in my pants and I ain’t afraid to show it,
I’m sexy and I know it 

LMFAO (the band) is not an urban acronym for laughing your backside off.  According to their Wikipedia page, it stands for loving my friends and others. Regardless, I miss the days my little girl would beg me to play the Wiggles’ popular hit Toot Toot Chugga Chugga Big Red Car.

I’ve often said that fixing and flipping houses is sexy.  TV networks and real estate gurus make it sound so cool.

In baseball terms, flipping is like a home run. It’s an 80-yard touchdown pass in football or a slam-dunk in basketball. Conversely, buying and holding and seller financing, both more long-term investment strategies, are baseball’s version of the weak bunt back to the pitcher, or a 1-yard football run. Yawn.

The truth is I’d abandon my fix and flip business tomorrow if I could raise enough capital and create enough cash flow to focus solely on seller carry backs.


Because with fixing and flipping I have no control over THE most important part of the equation – having a qualified buyer ready to pay my price for the home. And unlike a rental property, all I have to do with a seller carry back deal is collect the check every month. I needn’t worry about property management, running toilets or leaky roofs.

Last year, I sold a house in Peoria, AZ for $140,000 and carried back a note of $124,000 at 10% interest.  The buyer made 10 payments and then defaulted. I got the house back two months later and sold it again this weekend for $155,000 to a well-qualified buyer.

I have two other performing carry back deals that generate $1,400 a month in positive cash flow. In four years when these notes mature I’ll be able to purchase 3 more properties and start the party all over again.

That’s sexy and I know it.

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    Replied about 7 years ago
    Marty, I love the idea of Seller Financing. You picked one good example. How many homes have you owner financed? What were the results? I find that very few people have anything approaching a 10% down payment. I have sold ( bank financed) dozens of houses and usually the buyer brings $2000 or less to closing. Most buyers are FHA and put 3.5% down and they ask the seller for help with closing costs. How do you find buyers with money down? In Illinois, foreclosure and eviction take 15 to 18 months start to finish. In the meantime, you are not receiving payments ( you likely have payments you are making) , property taxes are not being paid, insurance is not being paid, the property is not being maintained, etc. I like the theory of this, but the reality is not quite as sexy.
    Marty Boardman
    Replied about 7 years ago
    Gary, I’ve done 4 carry back deals in the last 12 months. I advertised on Craigslist and my multiple listing service. I put a very basic website together called http://noqualifyinghomesaz.com. Finally, I did a co-op agreement with a marketing firm that does radio ads for carry backs. In less than 3 months I had a buyer’s list of around 60 people, all who had $20,000 – $60,000 to put down on a house. Many of these people strategically defaulted on their underwater mortgages. Others were self-employed business owners (doctors, contractors, etc.) that couldn’t qualify for traditional loans. Arizona is a trust deed state and we can foreclose in 90 days. So if we need to take a house back the process is very swift. I feel your pain in Illinois. I did a few lease/option deals in Crystal Lake and Lake in the Hills back in 2006. When the tenants defaulted it took me forever to get them evicted. Needless to say, I don’t do business there anymore. Thanks for reading.
    John Fedro
    Replied about 7 years ago
    Fun and thought provoking post Marty. It’s about time we read a post that acknowledged this fact. Best, John
    Marty Boardman
    Replied about 7 years ago
    John, I commented to Gary (above) that there are TONS of qualified buyers out there with substantial down payments and good income. I get 3-10 calls/emails a month off my website alone and I’ve done ZERO SEO for the site. People are really digging to find owner financing.
    Chris Clothier
    Replied about 7 years ago
    Marty – Great post – we can tell you had fun writing this one. You nailed it when you stated that there are tons of buyers out there with the funds and desire, but no access to funding. So, if you can provide it, this is a fantastic opportunity to grow. Chris
    Chris Clothier
    Replied about 7 years ago
    Marty – Great post – we can tell you had fun writing this one. You nailed it when you stated that there are tons of buyers out there with the funds and desire, but no access to funding. So, if you can provide it, this is a fantastic opportunity to grow. Chris
    Replied about 7 years ago
    Great topic. Owner finance, or ‘seller carry back’ is my main business. We have done over 13000 transactions in Texas in the last 25 years. We regularly are closing 5-10 deals a month all for a decent down payment, cashflow, and equity. I much prefer this business model over flipping, as I will be getting paid years from now for deals I’m doing today, creating true wealth.
    Curt Smith
    Replied about 7 years ago
    Where can one find a source of funds cheap enough to arbitrage at 10% out? Also the tax implications of seller financing vs lease to own or rent is significant. Folks here in GA do lease option and count the lease period as ownership of the house thus depreciated and fixup has an expense component. VS owner finance I believe is taxed the same as fliping, all ordinary income. I’d like to be corrected on this. One of the aspects of running a realestate business is tax strategies and implications. Few talk about ways to run this business re taxation. I’d do lease option vs owner finance, unless I’m doing it out of my self directed IRA, then seller finance is great! 🙂 curt