Found a seller that’s free and clear.

9 Replies

Found a seller that owns a 4 unit free and clear. He responded to one of my direct mail letters. I’m already under contract for another house, but this seems like a great opportunity to get a house with seller financing.

What benefits could I explain to the seller if he were to owner finance the house with? I figure he’ll save a ton in realtor fees and capitol gains, but what else? I’ve run some numbers, and he seems to have a price in mind around 475k. I think that’s a bit much when I looked at sold houses in the area and figure I would offer 400k, but the owners interest is what I don’t know how to negotiate. Is there a set rate? 4% could work for me but if I go higher than that, I begin to loose cash flow in the property. Just trying to get creative with my financing options since my capitol is tied up in the house I have under contract and I feel like this could be a great cash flowing property.

@Anthony Caruso

Unfortunately he wants a lump sum payment. I even offered to take out half a conventional mortgage and seller finance the other half if that’s even a thing and he still declined. Grumpy old man, his price is a bit steep too, I think he’s looking to just steamroll some one who doesn’t know any better but who knows. I’ll keep in touch with him any way

@Christopher Brown , try to find out what his pain is, why is he selling in the first place? I wouldn't mention interest unless he brings it up. If he really cares about getting a specific number, you can even offer him a higher purchase price at 0% interest. Maybe that can get his attention. Another benefit of seller finance is he still gets monthly cashflow without having to deal with being a landlord. You'll be upgrading him from a landlord to a lender. The bank always makes more money at the end!

But you need to find out his pain first before you can offer him a solution.

Make more than one offer - that's how you position seller financing as an attractive offer.  Make normal offer based on what you can make the numbers work with, and make a seller financing offer with more money involved for him, with better terms for you.  Your goal is to get a counter offer here, so that you know what you are really working with.

If he doesn't like either offer and won't give you a counter, he is likely not that motivated and you should move on, following up with him as time goes on.

The market is full of unmotivated sellers.  Just because a property is free and clear doesn't mean the seller is motivated or has any interest in seller financing.  Make your offer(s) and move on to the next deal, making sure to follow up later.

Good luck!

@Owen Dashner

Well said Owen! I broke down the benefits for him like the extra money he would make in the long run but he still wasn’t interested. He wants to do a 1031 exchange so I understand why seller financing wouldn’t fit here.

But then… I get a call today for another property around the same price range. Same circumstances so I figured I would make the same offer. This guy counter offers with f****** my wife. Wasn’t too happy to hear that. Lol…

This isn't the guy for you. You will get a lot of guys like this, experienced dudes that will take you for a ride. 

I would say if they wants a lump sum see what deal you can put together to get them a lump sum. Maybe hard money for the lump sum and a seller financed second ? With the agreement that they will maintain a second position when you refi out of the hard money. I agree with Owen make the offer that works for you if they don't bite move on and reach back out in a couple months.

Originally posted by @Christopher Brown :

@Anthony Caruso

Unfortunately he wants a lump sum payment. I even offered to take out half a conventional mortgage and seller finance the other half if that’s even a thing and he still declined. Grumpy old man, his price is a bit steep too, I think he’s looking to just steamroll some one who doesn’t know any better but who knows. I’ll keep in touch with him any way

 Of course he does. He has a valuable property that many people will pay top dollar for. That doesn't make him a grumpy old man.