Newbie seeking advise on owner financing

5 Replies


I been looking into taking the plunge on a property.  I have come across a possible deal that I may try to obtain via seller financing.  The person inherited the property and doesn't owe anything on it.  He has expressed that he doesn't like the fact that the money will get taxed heavily.  My question is, if I line up a seller financed deal and explain that this will ease the tax burden but then I sell after a year or so, does that in turn put him in the same spot as if he would have sold it traditionally to begin with?  I am not trying to be deceitful, just curious if this is not a good way go about obtaining this property. 


From my experience, you can't worry about what's gonna happen down the road.  If you sell it in a year or so, or whenever, you sell it because you are in the business to make money.  It's not deceitful, it's a way to make the deal work.  Who knows, it may be such a good rental property, you may not want to sell it.   Hope this helps!  

The owner may put pre payment penalties that step down over say a five or ten year period to protect his tax liability. His lawyer may advise him to do so. 

Hi John,

If you structure the owner financing well enough, you won't want to sell in a year or so!

For example, let's say the seller owns a $100K home free and clear that could rent for $800/mo. Seller doesn't want or need a bunch of cash upfront. You might offer:

  • $3K down paid to seller at closing
  • $450 paid to seller every month until the $97K balance is paid in full (in just over 20 years)

If accepted, you've just bagged yourself $97K at ZERO (0!) percent financing. That is to say, you'll be paying no interest for this money for the next 20 years. And (once rented) you'll collect $350/mo!

Still, if in 6 months you decide you don't want to hold onto this deal anymore, you could sell the deal with the financing in place to another investor. Who wouldn't want to step into a seasoned, cashflowing rental deal for $5K (or more)? And, as long as the seller continues to get paid each month, everyone's happy!

Thanks all for the advice. 

Can anyone recommend a book (or other source) that explains how to find good deals and which ones to pursue? With so many houses for sale around town its seems overwhelming and very hard to know if you actually have a deal worth pursuing. Especially for a beginner like myself. 


Hey John. I'm a beginner just like you but I have done quite a bit of reading over the past year and the best book I have come across is The millionaire real estate investor by Gary Keller. It breaks down all aspects of real estate investing. That one and of course The Ultimate Beginners Guide to Real Estate Investing. I found most of my books by just googling top real estate books and also listening to the biggerpockets podcast. At the end of each show they ask the guest what their favorite real estate book and business book are. The podcasts themselves are extremely helpful as well.

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