Is refinancing a seller carry a feasible zero-down strategy?

Question

Hey community,

I'm trying to wrap my head around structuring a hypothetical zero down deal CA. Does this scenario make sense or am I missing something here?

1. I control the property using zero-down seller financing - owner carries a mortgage for the agreed upon amount

2. Officially record the mortgage with the county and get my name put onto the title

3. Make monthly payments on time, keeping records of payment history

4. Apply for a traditional bank refinance after 6-12 months

5. Qualify for the refinance and cash the buyer out

Voila... a zero-down deal (minus the obligatory closing costs) with a happy seller

Does this sounds about right? Or am I missing something?

Christopher Phillips · Answer

@Austin I.

Most sellers are going to want some money down. Depends on their motivation.

If you get a relative to sell you an extra home they no longer want, they might be up for zero down. Most sellers are going to want some money to show you have skin in the game and for their own personal cash flow.

here's an example of what a seller wanted after approaching me and an investor buyer:

Rental property. hi ranch with a basement. 2 bedroom 1 bath on both floors. Unfinished basement with privileges for the 1st floor people to do laundry.

Wanted $300,000. Tried to offer $270,000 cash.

He said he would do the following:

$100,000 cash. He'd carry the balance on a promissory note. 6% with 30 year amortization. Balloon payment at year five.

Motivation: older guy with a lot of rentals. Winding them down. Worked for the Durst family for years doing construction. Wanted a little money up front and cash flow for the kids. Didn't want to take the capital gains all at once.