BiG Money, what am I missing?

Question

When Considering Deals for Rehab potential it seems that Selling on an Owner Finance Contract would create substantially more profit, be less time consuming and involve more exits- pretty much better all the way around, so what am I missing?

Does anyone know Lenders who have programs for short term(2yr) financing these types of deals?

Kevin Yeats · Answer

Part of what you have not taken into account is the timing of receipt of your profits.

By selling with seller financing, you delay receipt of a portion of your profits which the seller may desire if he/she would rather have an income stream such as in retirement.

A flipper, by contrast wants to most money (cash) from the sale as possible to then move on to the next project.

Question?  Contact me at the email address below.

Brian Gibbons · Answer

@Todd Lee

Many investors do not think of this:

Free and clear houses, have sellers apply for 80% first mortgage, get cash

Then you  take over payments and give a note for any excess equity

Gino Barbaro · Answer

@Todd Lee

Hi Todd

It is up to is to educate the seller and even most brokers about the value of seller financing.  It will usually only work with a motivated seller, but there are benefits such as a possible capital gains tax deferral, and higher monthly residual income to seller of he was going to stick money into the bank.  A buyer usually gets either price or terms, so buyers sometimes pay a bit more in price

It all depends on the deal

Good luck

Gino