How to find small owners who are interested in seller financing?

Question

I would like to find a small mom and pop apt owner. Ideally I'd like to start with  seller financing  or maybe even do a master lease on a smaller apt building so I can learn the ropes.

I'm not exactly sure how to find these kind of sellers who would be interested in seller financing. I'm located in San Jose, Ca,  idk if there are people who will take a young guy seriously.  Do you have any recommendations?

Account Closed · Answer

Carlos,

Let’s dance. My partner and I own a few multifamily buildings in San Jose. Let’s say we’re open to your idea. What do you have to offer to put us at ease to sign a master lease with you?

A BP member currently rents a few units from us and a couple of handful units from other BP members to run his travel nurse/corporate rental operation. He’s been traveling the world for the last 3.5 years on the arbitrage income he’s making from our rental rate and his corporate rental rate. He has someone runs his corporate rentals where he gives her a portion of the profit. Say he nets just $500/mo/unit, after all expenses and the split, times it by 20 units. That’s $10k/mo of passive income. This money goes a looong way in SE Asia where he can live on $1,500/mo. The rest of the money he’s blowing it on..... I don’t know. 😜

It’s doable, but it’s reserved for the special few. Put yourself in the owner’s shoes and work it backward. Why should they choose to work with you over others?

Have fun figuring it all out. I guarantee it’s worth the effort. The rewards are reserved for the special few. That’s why we have the 99%er and the 1%er. The same goes with real estate investing in the Bay. The high barrier of entry keeps the 99%er out. Only the special few gets to join the ranking.

Best of luck.

Aaron K. · Answer

In San Jose you won't find a lot of owner financing, and if you did it would be bad for you due to a high interest rate and low rental returns.  Most people aren't willing to tie up $1m+ for owner financing for who knows how long, this is much more common in other parts of the country and at lower price points.  Also there are going to be fewer investors who have paid off units in that price range.

Chris Salerno · Answer

Carlos, I hope all is well. In my opinion, I would look in another state. I know that rent control that California has placed into effect could be difficult on how much profit you are making.  I did a podcast today on how to find off-market properties. I would cold-call them and make sure you have a great follow up process to stay in touch with these owners.

Good luck and looking forward to your success.

Greg Dickerson · Answer

You can find them like any other motivated seller or off market property. The key is to call them up, build rapport and ask if they would be interested in financing. The one thing is you need to know what your doing and come across as a pro. There’s a lot of ways to structure this and is often more beneficial to smaller mom and pop owners.

Some of the the best ways to find off market commercial and multifamily properties is to compile lists from city and county websites if available or through a paid service like List source, Reonomy and CoStar or you can use free resources like Loopnet, CREXI, Ten-X commercial, Craigslist, tax database, general networking, brokers, property managers, title companies, environmental consultants, building inspection companies, appraisers, landscapers and other companies that service commercial and multifamily properties and driving for dollars. The key is consistent action and how you approach the owners and then the follow up. You need to be talking to hundreds of sellers these days to  develop good deal flow.

You can send letters and email but cold calling is by far the most effective method but you really need to know what you’re doing, how to open the conversation, what questions to ask and more importantly when to listen and not talk. Most importantly you need to convey confidence and assurance you are a player and not just wasting their time. Remember you are building relationships with the owners.

Follow up is crucial and where 90% of investors and sales people fall short. You have to consistently follow up in a meaningful way and you will get deals.

How to find small owners who are interested in seller financing?

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