Using Realtor to purchase seller financed rentals
My husband and I would like to start investing in rental properties. There are a lot of duplexes in our area that have a good return. We have excellent credit and have the income to get approved through a conventional loan. However, we do not have the 20-25% down payment required for investment properties since we recently bought our own house and paid for our wedding.
Is it possible to use a real estate agent to find seller financed properties? Are they discouraged from wanting your business since seller financed properties are harder to find? Please feel free to offer advice that might not be related to the realtor question but could help us get started.
Thanks!
@Monica Busam you nailed it seller financed properties are harder to find but if you find them on your own the agent won't mind completing the transaction. What they don't want to do is take you to a bunch of properties that don't say owner financing in the listing and have you ask every seller if they will accept owner financing.
Hey @Monica Busam! You can also try to house hack and do a 3.5% down as a first time home buyer (it doesn’t actually need to be your first, just 3 years since you last purchased). This well help you having more options and with the rates of loans today save a bunch of money!
@Aaron K. So would it be reasonable to have your realtor reach out to sellers/listing agents for properties you scoped out to see if the seller is interested in seller financing prior to viewing the house? And only viewing the house if the seller would be open to it? I just know there are a lot of people who waste real estate agents time so I want to make sure that this isn't asking too much.
@JOSE BATISTA ABIKARRAM yeah our house that we live in was purchased through an FHA loan almost two years ago. We would like to strictly use the property as an investment property and not to live in so I don't think that would work. But I hear a lot of people make that work by living in half the duplex and have the renter pay their mortgage.
@Monica Busam as an agent that will get old real quick depending on where you are. In Southern California for example seller financing isn't a thing, nobody will accept it except very few homes in vacation areas. I think most agents would see it as a waste of time, generally if seller financing isn't mentioned in the listing the seller doesn't want it. You can ask the agent but I think you may get less than stellar service even if the agent agrees to do that.
@Aaron K. Okay so we might be better off asking the listing agent or finding the deals on our own. I'm in Cleveland and the market here is much different lol. Houses sit a lot longer, so that might make sellers more motivated. Thanks!
Yes don’t close off to the solution. You only have to love there for a year and you could rent your current house and you will definitely have a lot more cash flow that way. Look at the numbers and analyze different scenarios. You only know something don’t work for sure until you try it!
@Monica Busam yeah I'd suggest that if you ever need to find the listing agent they are always the first on the list off to the side on the Zillow page for the property. Because you are in Cleveland you might look into places that sell portfolios of rentals they bundle and discount. They are much more likely to offer financing usually have tenants in place and you can get more for your money.
@JOSE BATISTA ABIKARRAM yeah we have and still are considering it. Our current house is in a hot neighborhood so it should rent pretty easy. It's definitely an option!
It's certainly possible, but not as common. You might instead look at FHA with only 3.5% down or conventional with 5% down. A duplex would work really well for that. Me coming up with 40k to put down for a 200k house was out of the question. Instead I put down only 10k.
You are looking for a needle in a hay stack. There is an option to look on the MLS for "seller financing" but when I do that maybe three properties come up.
Then out of those three properties they have to meet your want and needs. I think the rate of this happening is slim.
Either look on your own OR pay a realtor a retainer to assist you. A realtor only gets paid when you close so if the chances of you closing are slim, offer some cash up front for their services. Then a Realtor will take you more seriously.
I kick too many tires to use a realtor. I’m under contract on an 8 unit with 15% down owner financing which wasn’t mentioned in the listing. I couldn’t have a realtor waste time contacting people that don’t even mention owner financing in the listings. I just closed on a 4 plex with 15% down owner financing as well.
@Eric Mayer May I ask did you find those MF units from the MLS yourself?
@Ryan Nguyen Yes I have found everything myself on the mls. I can buy properties other investors pass on if I can get a low down payment and decent terms. The 4-plex I mentioned was $30k down. The property cash flows $1k per month for about a 40% return in 1 year. I have to talk to a lot of people to get these deals. I offer full ask to get their attention. The down payment and terms are key.
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Originally posted by @Eric Mayer:I kick too many tires to use a realtor. I’m under contract on an 8 unit with 15% down owner financing which wasn’t mentioned in the listing. I couldn’t have a realtor waste time contacting people that don’t even mention owner financing in the listings. I just closed on a 4 plex with 15% down owner financing as well.
Refreshing to see someone who understands what they do and do not bring to the table who it comes to working with Realtors....Good job out of you. Newbies take note.
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Originally posted by @Monica Busam:My husband and I would like to start investing in rental properties. There are a lot of duplexes in our area that have a good return. We have excellent credit and have the income to get approved through a conventional loan. However, we do not have the 20-25% down payment required for investment properties since we recently bought our own house and paid for our wedding.
Is it possible to use a real estate agent to find seller financed properties? Are they discouraged from wanting your business since seller financed properties are harder to find? Please feel free to offer advice that might not be related to the realtor question but could help us get started.
Thanks!
In a nutshell no you would not be an ideal client for a Realtor to take on. At best you would be a long shot at a commission check for the Realtor. The Realtor would earn more money by spending that time on other clients / opportunities.
@James Wise Thank you for the kind words! I think it was one of your videos that helped me get into 4-plex investing. You were pretty pumped up about commercial rents with residential financing. I kept telling my wife we were getting those commercial rents! Lol I did do my first few with conventional financing.
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Originally posted by @Eric Mayer:@James Wise Thank you for the kind words! I think it was one of your videos that helped me get into 4-plex investing. You were pretty pumped up about commercial rents with residential financing. I kept telling my wife we were getting those commercial rents! Lol I did do my first few with conventional financing.
Hell yeah Eric. Great job man. Keep up the good work.