How I Accidentally Landed My First Seller-Financed Deal

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Hi guys and gals; it has been a few months since my last writing. I’ve been working on diversifying my real estate investment strategy. What I want to share with you today is how my first seller finance deal was accidental.

The Back Story

If you’ve been around BiggerPockets for a while, you may know that I typically stick to wholesaling, and I have a smaller portfolio of rentals. This is where I am comfortable, but I know if I want to reach my goal of 50 doors by the age of 50, I need to move things a long. So I’m working on increasing my portfolio by leveraging some of the assets I have in order to acquire more. Well in doing so, we made a bad purchase. I say “we” because I let the emotions of a partner skew my decision.

We purchased a small frame house in a rural area. The house being small wasn’t a issue. The rural area was not the complete issue either. But the house being small and in this certain rural area was an issue.

Our problem was that we purchased this property for one specific reason: to help homeless teens. We did not look into this project as a money maker, it was more philanthropic. We looked at this project without our investor hats on, and we did not have multiple exit strategies.

Related: The Definitive Guide to Using Seller Financing to Buy Real Estate

The Problem

Let me outline the problem. We did our research and found out through our network there were government subsidies allotted for the project. So not only can we give to the community, but the project could be profitable as well. So we were all in. We acquired the property, subsidies were awarded to us to complete the majority of the rehab, and of course we had county approval. Here’s the problem: During this time, there were county elections, and politics got in the way. Ultimately, the newly elected county commissioner disallowed the project. Here we were with a (small) loan on a property, in a rural  d-class area, and vacant. What the heck am I going to do with this property? I wanted to know.


The Solution

We, or rather, I should say “I,” had to look at the bright side, although it was not glaring. We had a property with a $20,000 note. We had completely rehabbed with money we did not have to repay due to politics. I began to market the property for rent. I knew the tenant pool would be small, and most likely they’d have some credit issues, but we had to take a shot.

We found a traditional paying tenant (not section 8). Although the prospective tenants credit wasn’t good, he had a got a good job he’d been at for over a year. This definitely went against all of our procedures (bad credit), but we were somewhat desperate. Not because the $20,000, but because the house was vacant in this area. We finally decided to rent the unit to the prospective tenant because the references checked out. He rented the property for two years, and he was compliant with paying rent (although he would be a few days late at times). We had a positive cash flow of just over $230.

One day, after a short conversation, he stated that he would be interested in buying the house. I knew traditional financing for him was not an option at the moment, so I begin slowly introducing the tenant-to-lease option. I had some background on lease purchase, but was not completely familiar. It took some time for me to completely educate myself as well as educate the tenant.

Related: 5 Reasons to Consider Seller Financing for Your Investments


The contract was prepared by the attorney and signed by both parties. We agreed get to a purchase price of $54,000, with $15,000 down and 7 percent interest for 12 years. Nothing really exciting, but remember, we only had a $20,000 note left on the property, so our horrible acquisition was beginning to turn around for us.

Before finalizing the agreement, he called early one morning to say the detached garage was on fire and completely burned down. Everyone was OK, but the garage was destroyed, and the vinyl siding on the rear of the house was melted. The insurance paid the damages, which happened to be more than the amount owed on the property.

The entire dynamics of the deal had now changed, because now, instead of lease option, I could sell the property through seller financing. We agreed to decrease the purchase price of the house rather than replacing the garage (part of the money from the fire to pay off the note and repair the vinyl siding).

Finally, a note was created for the same terms as above, minus $10,000 for the garage. I also used the buyer’s down payment for a down payment on a new acquisition. So in essence, we created a note on one SFR and purchase another for rental (with much better numbers).


This terrible acquisition is now cash flowing without the headache of repairs, and it even created another stream of passive income. Although the seller financing was completely accidental, I was not closed minded when it came to finding solutions to turn the acquisition around. I used the resources I had, including BiggerPockets, to help me navigate my way through this mess. As an investor, you will make mistakes, but try to find the best solution to rectify those mistakes.

Questions? Comments?

Leave them below!

About Author

Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.


  1. Rick Grubbs

    Reminds me of the joke the fellow that was bragging to his buddy about how he made$30k from the insurance company from a fire. His friend says, “That’s nothing. I had a flood and made $60k.” “Really?” says the first guy, “Say, how do start a flood?”

  2. Kalyanii Kennedy

    Great post and like how you navigated through all that was thrown at you and still came out on top! You went in with a philanthropic goal that had to be changed but you ended up helping someone get their own place that wouldn’t have normally been able to. Do you still did good. Great job!

    • Marcus Maloney

      Elizabeth, it was a basic note we created and we have FCI Servicing service the note. Here are the terms I mentioned in the post: We agreed get to a purchase price of $54,000, with $15,000 down and 7 percent interest for 12 years. We did decrease the purchase price to $44k to compensate for the garage. We will profit roughly $320 a month on a house that was a headache. The end goal is for the buyer to refinance (after seasoning about 8 months), cash us out and then we will be completely done. I’m sure there was a lot I could have done better but I understand the process and will look to possibly do these more often in my area.

  3. James Dickens

    Great Post Marcus and great job in creating a Win-Win out of this. I have been doing a lot of research on leases and it does take a bit of a change of perspective and education to understand the benefits. As a friend of mine likes to say, “No good deed goes unpunished” but in this case, although at times it was stressful, you came out on top with education and perseverance and with that created a great example of what can be done when you put your mind to it.

    • Marcus Maloney

      James, my sentiments exactly, I was unfamiliar with everything but with guidance and persistence we were able to get it done. I tell people to face those fears and uncertainty as soon as possible and you will be over to overcome that challenge. Good thing I practice what I preach lol…

  4. karen rittenhouse

    Congratulations, Marcus! It’s great to hear how things worked out because you persisted!

    And, amazing that your tenant had $15,000 to put down?!?!? No risk with that lease to own.

    Thank you for sharing and letting us see how your great heart and good intentions led to success for both you and your buyer.

    • Marcus Maloney

      Karen, Thank you! I was shocked when the tenant told me he would put that much down which was a 1/3 of the total acquisition. I figured it was minimal risk with those numbers so I persisted. I had a great attorney that help as well and only charged me $1000 to get everything drawn up and represented me at closing as I am an out of state absentee owner. When you give you definitely receive and often its better to receive in favors than in money……Thanks again

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