Antioch California · Member since 2014 · 13 posts · 0 votes
Hello Everyone,
So today I had a thought around seller financing. Is it possible to propose a seller financing option to a buyer with a property you have under contract from a wholesale deal? My thinking was after getting the property under contract, instead of the normal contract assignment with assignment fee I could use the seller financing option and have the buyer make enough of a down payment to satisfy the price in the original agreement of sale and have monthly payments with interest paid to me.
Hello and welcome to this site and asking such a unique question Daniel! Not that I agree with what you are doing, I am not surprised on what you have to do in California to make any money. To try to make a long answer to a shorter answer I'll try to make my point. It's not very honest to make a dollar that way. It is not right to have that way through dishonesty, especially with a real estate sale. Besides how I feel about this question is to have two closings and hope that the Owner will not hear about this. You can have to get another person sold before you close and make payments to you.
I am not an Attorney but I think you can do this. They are or can be a deal that the current Owner does not know about. You can have two different closing the deal twice and know your event. The best way to get the Owner provide financing by showing the pluses of the Owner Financing on paper. Doing an out of state deal can be difficult. Try to do it in a city that has a 3rd party relative or a friend that is local of the subject property that will help you out and reduce your travel expenses down.
I would normally tell you to be honest with the seller except from when you are Wholesaling and assigning the contract. Sometimes, you feel like Owner is not safe to tell about your wholesaling. That way your profit is unknown by the Owner/seller. You will make the payments agreed to the previous Owner and you receive a payment from the person you sell to.
Thanks @Michael Lee for your response! It is not my intention to be dishonest, I had the thought and was wondering if others are using this strategy. I appreciate your keen insight as I'm still pretty new to real estate and working on my first deal. Being a new investor in Cali definitely comes with its challenges and I'm starting to wonder if it is at all feasible to start here.
I have been considering building a team in different markets to optimize my ROI thinking it may be slightly easier to locate a motivated seller that are not asking for retail. My plan would be to identify zip-codes with most cash transactions in markets with median home price at or below 320K, then mail at least 1K post cards every week for about 6-7 weeks. Now for this to work I will need boots on the ground to go on appointments and put properties under contract. What are your thoughts on going about getting my first deal this way?
Daniel Banks I’m not sure if what you’re suggesting in the original post is possible.
It might be but if it is that’s a lot of moving pieces. I don’t see how you could do that unless you actually close on the property yourself without just assigning contracts.
From your second post it sounds like you have some money to do stuff with. If you do I would just spend that on rentals assuming that’s your end goal. Spending money on direct mail will be a slow process.
I’ve done off market deals just by networking long distance with locals and local agents.
No mail needed.
Hello @Caleb Heimsoth and thanks for your reply! The seller financing idea seems very involved for sure. My goal is to obtain passive income through multi- Family rentals. To fund this I am working to build liquidity through wholesaling. I really like your strategy on networking with locals it reminds me of David Greene’s advice in his book “Long distance Real Estate investing” where he pretty much says to build your core four and find an investor friendly real estate agent to help find deals in those remote markets.
Can you share some of your tips on how you go about developing these relationships? Any tip would be much appreciated!
@Daniel Banks yeah so to be blunt you just told me the same goal as about 99 percent of people on BP.
That’s great but my point is it’s nothing special and it’s harder than most people realize. To reach your end goal IMO wholesale is not the way for about 99 percent of people. You spend a lot of money and likely do 1 if any deals.
So that aside I’ve done all my networking through BP and by visiting the markets I’m in. That’s really all there is to it. You’ll have some trial and error along the way but you’ll learn as you go.
As far as what’s in David Greene’s book, I think it’s good in a way but it glosses over a lot of the details and finer points. If you do rehabs long distance I think there’s a 50/50 chAnge you get ripped off.
Also let’s quantify what’s a deal. I am not finding like Home run deals of 30-40 or more cash on cash returns. I’m doing simple basic base hits of 8-12 percent consistent return.
@Caleb Heimsoth initially my goal, being a military veteran was to just jump head first and into rentals and get a 4 unit multi family using my VA loan to finance it. While this to me seems to be a very practical approach there are zero properties in California that meet my needs and in the loan it states the property must be my primary residence. After a bit more of research and learning I discovered the 203K loan and my eyes widened! I honestly would rather skip wholesaling but I'm still working on positioning myself for meeting the lending criteria and having a decent nest egg to finance the rehab.
@Daniel Banks well the rehab part is where you’ll likely be met with the biggest issues.
If you do that long distance I hope you know what you’re doing. If you follow the path I’ve done so far, it’s buy turnkey out of state, then diversify. Repeat.
There have been some minor rehab stuff but not the major stuff you’re probably thinking.
Hello again! Thanks for your kind words. Unfortunately, right now I am bedridden and cannot walk so I could not commit to do anything that involves my ability to leave home. Your question sounds like a sales ploy but it might work. Reaching out to get others to help you is not a dumb proposal. Time will tell if your proposal works and you get response. Best wishes!