Creating Financing as a new investor
Hi BP,
I am a Real Estate Agent here in the Little Rock area. I am excellent at finding the right deals on and off market that allow for little to no money down at closing. I am looking for creative ways to create funding myself for deals I am able to locate before they hit the market.
Any advice on how you got started with little to no money down as a new investor?
My plan, going forward, is to buy properties using Subject-To (making payments on the existing mortgage) with the goal to pay the remaining amount by Seller Financing so I do not have to get a Loan or other financing. But the Seller almost always is looking for some cash, so some money or financing will always be needed.
Is there any specific way you have done this or negotiated this in the past?
I'm part of a REI group that has trained us on how to make the presentation using tools they've provided (we bought).
I would go through the numbers with a Seller to show them all the Costs associated with selling their house and what their final cash amount could be. Let them know that they could spread out the capital gains tax by seller financing the cash amount to you over terms. Be sure to include the Dealer commissions even if you may not use them, and the other Mortgage, Insurance and Property Tax amounts they are responsible for until the property is closed on. They would only pay tax on the amount they received in a year instead of the entire amount (which could possibly push them into a higher tax bracket).
Show them how they are protected in the Subject-To sale because IF you fail to make payments on the mortgage, they will know about it immediately since it is still in their name, and in worst case scenario they would get the house back, but we never want this to happen.
#3 Starting Out Contributor
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#3 Starting Out Contributor
- Flipper/Rehabber
- Pittsburgh
@Benjamin Thomas I don't think I understand your question - if you're finding these deals that allow for little to no money at closing then aren't you all set?
Quote from @Nicholas L.:
@Benjamin Thomas I don't think I understand your question - if you're finding these deals that allow for little to no money at closing then aren't you all set?
Looking for a different approach such as Bill Quigley's answer about Seller Financing