I recently saw a property that is available to buy as a seller financed opportunity. I would love to hear from you folks here as to what I should look out for and any gotchas or any other resources you could point towards me. Thanks.

This is what i am shooting for 6% down 6% interest 5 Year balloon Monthly payments: $500 less than rents coming in

@Sam Faas I have found that advertised seller financing deals usually are overpriced or the terms are not favorable; i.e. high down payment, short term or high interest rate. You are most likely going to have the best luck of finding a good seller financing deal by searching out motivated sellers yourself, building rapport and then explaining seller financing. Possibly making 2 offers; one traditional offer and a higher, more favorable seller financing offer.

@Sam Faas An owner financing agreement between buyer and seller should always be memorialized in a written document that includes the specifics of the deal. However, there are a few different ways to accomplish this, and the best option will depend on your specific needs and circumstances. Here are three main ways to structure a seller-financed deal:1. Use a Promissory Note and Mortgage or Deed of TrustIf you’re familiar with traditional mortgages, this model will sound familiar. The buyer and seller agree to the terms of a promissory note that details terms like the loan amount, interest rate and amortization schedule. The mortgage is secured—or collateralized—by the house, the buyer’s name goes on the title and the mortgage is recorded with the local government.2. Draft a Contract for DeedAlso known as an installment sale or land contract, a contract for deed is when a buyer does not receive the deed to owner-financed property until he makes the final loan payment. Alternatively, the buyer receives title if he refinances the loan with another lender and pays the seller in full.3. Create a Lease-purchase AgreementThis option, also referred to as rent-to-own or a lease option, involves a seller leasing a property to a buyer who has the option to buy it for a set price. The buyer pays rent and, at the end of the lease term, can purchase the property or give up his lease option. If he opts to buy the property, rent paid during the lease period is applied toward the purchase price.Because owner financing can be complex, we recommend working with a licensed attorney who will consider your best interests when drafting the necessary documents. Good luck!

Make sure to close the transaction at a title company and have the deed and title put into your name. This protects you if the lender/seller passes away or would try to sell the property out from under you and your seller finance agreement. It's worth the $1k or so to take the correct measures. I've heard from several people who thought they had an owner finance agreement signed at the kitchen table, assumed they were paying down equity only to have the house sold right out from under them.

The total loan is due in 5 years

Ben, How common is this that a seller is willing to give up their deed upfront in exchange for seller financing. what if the buyer doesn't hold up their end of the bargain? How does the title transfer back to the seller in that scenario? I'd love to see a copy of a contract if anyone has one with this scenario.

There is one available on the OREC website. Or DM me your email address and I can send you one.

Thanks for your reply! This is incredibly helpful. What does the 5 year balloon mean? This seller is offering 5% interest with 20% down and it is approximately $900 more in rents than the payment. Is there anything else I should ask for? Also what kind of origination fees/points would such a loan incur?

Thank you @Andrew. Appreciate that alot.

How to structure a seller financed deal?How to structure a seller financed deal?

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How to structure a seller financed deal?

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