Hello I am very new to this and I am looking into becoming an investor, but I currently have very little money. I have heard about seller financing, and was wondering how often any of you have used or tried to use seller financing? Im looking mainly at getting 80% from a bank and getting the other 20% from the seller. Do most sellers agree to this? If they don't do you have any other methods to get a property with no money out of pocket? Thanks!
Seller financing is generally is fairly rare in a hot market and occasionally available in a bad market. It's usually available when people want to sell a property quickly or have a property that lenders won't extend loans for any number of circumstances.
That said, it doesn't mean it's not available, but it will have hurdles like any other loan. They often require greater down payments, higher rates, a 1-5 year refinance period where the buyer/borrower has to refi out into a conventional loan or face a balloon payment, etc.
I've done several of these using land contracts in the past and they all worked well.
Hey Hunter, there are tons of different scenarios when it comes to owner financing and as mentioned by others it can be a rare occurrence for someone to agree to. One thing to comment on from your question is getting 80%ltv from a bank and 20%seller financing is an even more rare occurrence as most banks won’t loan unless you(or an entity that you are a part of) actually put in your portion. In other words a bank will only loan on 80% of the “net amount due at closing” not of the actual purchase price.
There are however many different ways to present seller financing to motivated sellers to get them to consider the deal. Show them the upside of them being the “bank” make a Multiple option offer rather than just one. For example-
1. $1m purchase price. Cut and dry.
2. $1.2m purchase price; $25k down. seller financing on net amount due 60 month balloon fixed rate etc etc etc
3. $1.25m purchase price; seller financing on net amount due etc etc
Show them the value of being the bank and how you can “afford” to pay them more for this property if they are. And if not you can get into a better acquisition cost of not.