Seller Financing possibilities for phoenix AZ

[Jared Schott]

Hi guys, I just made my account but have been listening to the podcast a lot recently but have been hopeless in finding a deal in phoenix. Well, I may have just found a possible deal but am worried it is not a good deal. I guess I need someone to just listen and tell me I am crazy or what my options are. I apologize if that is too much or not allowed. I will give you the numbers then tell you mu strategy idea. 

house purchased for 415,000 in august of 2020 at a sub 4% rate but I treat it as 4% because I am not 100% sure what the rate is (I am getting into contact with realtor soon don't worry)

The house could rent for 2,500 per month at minimum and I think I could get 2600-2900 but not 100% sure.

It is now on the market for 600, 000 but I think I could get it to 575 since it has been up for a couple months.

well 575,000 at a 7% APR is way higher than the rent so I was thinking I could do a seller financed route. This is where the problem lies.

I have been working out some numbers but honestly the podcast has never told me exact numbers and how seller financing really works. Is there a resource you could point me to or maybe I could pay someone to hold my hand through this process? When I was working out numbers for seller financing, I got to the point of giving the owner $315,000 lump sum then taking over the loan at 2000/month however when you do ROI that means you'll get $800/month cashflow at best which is 800*12months for a total of 9600/year CF. if you do 9600/315,000 that means you get a ROI of 3%. which is not nearly as good as stock market. also 315,000 lump sum I do not have :( I need help. This account is brand new so I will be getting a profile picture soon as recommended by the podcast. Thank you guys, if there is any confusion let me know as I am trying my best to paint the full picture so the best advice can be had. THANK YOU!!!

[Nicholas L.]

@Jared Schott

the short answer is - if the house is already on the market, it's extremely unlikely that they will accept a seller finance offer.  they will simply look to sell traditionally.

and the whole point of seller finance is to put less down, not more.

it sounds like this isn't a deal - so on to the next one

[Jackson Harris]

@Jared Schott

Seller financing will definitely be a stretch if the home is listed currently. Most homes for sale on the MLS are not looking to go with seller financing, in my experience usually you get those types of offers from the seller looking for buyers that want seller financing which is few and far between.

I think your best bet here could be to offer sub2 but even that is a far stretch. I'd say this deal overall doesn't seem like the best deal given the numbers you gave as well.

My business partner and I do investment deals all the time in Phoenix, we should grab coffee sometime and talk through a strategy based on your goals. I'll message you.

[Bill B.]

Put the $315k you don’t have in a bank CD and earn twice as much. 

The more expensive a house is the worse the return usually is. Look for $400k homes with better returns. Or 2 x $300k homes. Have your realtor search the remarks area for seller financing. 

[Jared Schott]

Quote from @Account Closed:

Quote from @Jared Schott:

Hi guys, I just made my account but have been listening to the podcast a lot recently but have been hopeless in finding a deal in phoenix. Well, I may have just found a possible deal but am worried it is not a good deal. I guess I need someone to just listen and tell me I am crazy or what my options are. I apologize if that is too much or not allowed. I will give you the numbers then tell you mu strategy idea. 

house purchased for 415,000 in august of 2020 at a sub 4% rate but I treat it as 4% because I am not 100% sure what the rate is (I am getting into contact with realtor soon don't worry)

The house could rent for 2,500 per month at minimum and I think I could get 2600-2900 but not 100% sure.

It is now on the market for 600, 000 but I think I could get it to 575 since it has been up for a couple months.

well 575,000 at a 7% APR is way higher than the rent so I was thinking I could do a seller financed route. This is where the problem lies.

I have been working out some numbers but honestly the podcast has never told me exact numbers and how seller financing really works. Is there a resource you could point me to or maybe I could pay someone to hold my hand through this process? When I was working out numbers for seller financing, I got to the point of giving the owner $315,000 lump sum then taking over the loan at 2000/month however when you do ROI that means you'll get $800/month cashflow at best which is 800*12months for a total of 9600/year CF. if you do 9600/315,000 that means you get a ROI of 3%. which is not nearly as good as stock market. also 315,000 lump sum I do not have :( I need help. This account is brand new so I will be getting a profile picture soon as recommended by the podcast. Thank you guys, if there is any confusion let me know as I am trying my best to paint the full picture so the best advice can be had. THANK YOU!!!

The way we counter those numbers to make it a great deal in Phoenix is to buy off market and take over the existing 3% financing. If you skip using a new loan, you avoid the costs of origination and high interest rates, It works well for our clients in Phoenix and in CA.

Sorry if i did not make it clear, I meant i would take over the loan that is sub 4%(might be 3% but haven't gotten confirmation). but with that 315,000 lump sum it kills ROI. Do you agree that this is nto a worth while deal? other comments seem to think its not a deal

[Jared Schott]

Quote from @Jackson Harris:

@Jared Schott

Seller financing will definitely be a stretch if the home is listed currently. Most homes for sale on the MLS are not looking to go with seller financing, in my experience usually you get those types of offers from the seller looking for buyers that want seller financing which is few and far between.

I think your best bet here could be to offer sub2 but even that is a far stretch. I'd say this deal overall doesn't seem like the best deal given the numbers you gave as well.

My business partner and I do investment deals all the time in Phoenix, we should grab coffee sometime and talk through a strategy based on your goals. I'll message you.

Apologies for the ignorance, but when you say "sub2" what does that mean?

[Jackson Harris]

It's a financing strategy where you would take on the mortgage payments, but the mortgage would still be in the sellers name and you would take title to the property.