How to wholesale a seller finance
Rental Property Investor · Chicago, IL · Member since 2019 · 30 posts · 5 votes
Hello BP family i am currently trying to wholesale my first seller finance deal and trying to negotiate terms with the seller.I am looking for advice on how to negotiate terms with seller like like im trying to get zero downpayment for full asking price and dont know what interest rate i should offer. I was thinking about offering zero downpayment at 5% interest with a 30 year amortization schedule and a 7 year ballon. Any advice would be greatly appreciated. Thanks
I like to refer to the rates on a Certificate of Deposit (CD).
Example:
If CDs are offering 4% interest, then your offer to the seller should be equal to or greater than 4%. If I was the one selling/financing the property, that would be my perspective. I'd need a reason to invest in you rather than a CD. For me, my reason would be "I'd rather make 5% on my money than 4%" However, every seller has their own perspective and different things that motivate them.
If ROI motivates them, I would share an illustration that simply shows them the benefits of seller financing rather than investing in a CD. I would highlight the pros of the installment sale and the higher return from seller financing.
Figure out what motivates them and use that as your basis.
1) most owner finance deals carry a higher rate than current market rates
2) very few sellers would be foolish enough to accept a zero down payment
You’re assuming you’ll be able to sell this owner financed contract to some random person, unknown to the seller.
I like to refer to the rates on a Certificate of Deposit (CD).
Example:
If CDs are offering 4% interest, then your offer to the seller should be equal to or greater than 4%. If I was the one selling/financing the property, that would be my perspective. I'd need a reason to invest in you rather than a CD. For me, my reason would be "I'd rather make 5% on my money than 4%" However, every seller has their own perspective and different things that motivate them.
If ROI motivates them, I would share an illustration that simply shows them the benefits of seller financing rather than investing in a CD. I would highlight the pros of the installment sale and the higher return from seller financing.
Figure out what motivates them and use that as your basis.
Ok yes thank you for the advice I think im going to start off offering a little more that the what the cds are offering. I would also like to wholesale the seller finance deal. Can I lease option a seller finance deal? or I was also thinking wholesaling the contract to another investor with a downpayment of like $5K and a higher interest rate like a lease option.Thats what im working on trying to figure out right now. Thank you for getting back.
1) most owner finance deals carry a higher rate than current market rates
2) very few sellers would be foolish enough to accept a zero down payment
You’re assuming you’ll be able to sell this owner financed contract to some random person, unknown to the seller.
Hi Wayne, yes that is what im trying to do. I would essentially be trying to wholesale the seller finance deal to another investor. I am trying to get zero down because he is asking for a high price so i told him I might be able to come up to his asking price if he is willing to give me a zero down payment. So im trying to get zero down with a 4.5% interest rate at his full asking price and he is thinking about it. But know im thinking about the exit strategy if I should wholesale the contract to another investor or do a lease option with a regular buyer. Thanks for getting back at me
I like to refer to the rates on a Certificate of Deposit (CD).
Example:
If CDs are offering 4% interest, then your offer to the seller should be equal to or greater than 4%. If I was the one selling/financing the property, that would be my perspective. I'd need a reason to invest in you rather than a CD. For me, my reason would be "I'd rather make 5% on my money than 4%" However, every seller has their own perspective and different things that motivate them.
If ROI motivates them, I would share an illustration that simply shows them the benefits of seller financing rather than investing in a CD. I would highlight the pros of the installment sale and the higher return from seller financing.
Figure out what motivates them and use that as your basis.
Ok yes thank you for the advice I think im going to start off offering a little more that the what the cds are offering. I would also like to wholesale the seller finance deal. Can I lease option a seller finance deal? or I was also thinking wholesaling the contract to another investor with a downpayment of like $5K and a higher interest rate like a lease option.Thats what im working on trying to figure out right now. Thank you for getting back.
I like to refer to the rates on a Certificate of Deposit (CD).
Example:
If CDs are offering 4% interest, then your offer to the seller should be equal to or greater than 4%. If I was the one selling/financing the property, that would be my perspective. I'd need a reason to invest in you rather than a CD. For me, my reason would be "I'd rather make 5% on my money than 4%" However, every seller has their own perspective and different things that motivate them.
If ROI motivates them, I would share an illustration that simply shows them the benefits of seller financing rather than investing in a CD. I would highlight the pros of the installment sale and the higher return from seller financing.
Figure out what motivates them and use that as your basis.
Ok yes thank you for the advice I think im going to start off offering a little more that the what the cds are offering. I would also like to wholesale the seller finance deal. Can I lease option a seller finance deal? or I was also thinking wholesaling the contract to another investor with a downpayment of like $5K and a higher interest rate like a lease option.Thats what im working on trying to figure out right now. Thank you for getting back.
I never thought about holding onto it but that makes alot of sense. seller finance repair and rent and when the market goes up sell it or just continue to hold onto it for the cash flow.