Is Seller Financing Really Effective?
Is Seller Financing really an effective method to get access to multi-family units? I’ve been listening to BiggerPockets podcasts and reading about it - I just can’t process that to be something that really works in this industry. Has anyone had success with doing a seller financing deal recently - and how did you go about finding & negotiating that deal? I’d love to hear some success stories or just any advice on how to go about doing a deal like that!
Hi Steven,
Exactly. Yes, they can also be used with BRRRR. In that case, you'd keep the property which was originally financed with a seller carry back note (instead of selling it) and you would put new financing on that original property, with cash-out. In this process you would simultaneously walk the seller carry back note to acquire a new and different property. Timing works out fine when all parties & escrows work towards a common goal.
@Craig Parsons Quick question..... I'm trying to figure out how you were able to increase her net but also profit in the process.
I would do it every single time if I could. Closing takes 5 minutes and is 3 sheets of paper. The hard part is explaining it to people and convincing them. They think you're trying to take something from them while in the end they actually make more money and don't take a capital gains hit all at once. I even "refinanced" my seller carry loan and went from a 30 to a 15 year with a 5 year balloon.
So after 6 years of owning this property I will have a 10 year note left. Amazing.
@Alfred Blake. Good question. The way it works out I basically break even. However the property is only 60% occupied and the occupied units are way under market value. So over the next year I plan on increasing revenue by 25%