Flipping with Seller Financing?

Question

New to RE investing and learning about different financing options to fuel my flipping business. How feasible is it to have an offer accepted utilizing seller financing for non-REO properties with the intention to flip? It feels like this would be like asking a seller to be a HML because you'd have to offer a higher interest over a shorter period of time. New to this financing avenue and curious what the BP community thinks.

Context: I live in COS but plan is to start flipping in Pueblo to build equity and experience. Likely going to start with private equity from family/friends but exploring other financing options to quickly scale once I get going.

Thank you in advance!

Context: I live in COS but plan is to start flipping in Pueblo to build equity and experience. Likely going to start with private equity from family/friends but exploring other financing options to quickly scale once I get going.

Thank you in advance!

Tanner Pile · Answer

@Kelsey VanSleen

You could also look into partnering with the seller if they are not able to do seller financing and split the profits with them as a partnership.  Make sure you get your name on the deed or have some type of contract so they don't change their mind about the partnership after making the house all nice after the rehab.

Kelsey VanSleen · Answer

@Evan Polaski great points thank you!

Kelsey VanSleen · Answer

I hadn't considered multiple offers. Thank you!

Evan Polaski · Answer

@Kelsey VanSleen, along the lines of Andrew's comment, it all comes down to seller's needs and solving a problem for them.

While seller financing is less common with flips, there is no real reason it can't be used, as long as it satisfy your needs and the sellers.

I always take seller financing cautiously though.  Like anything is sales (and you are in sales even when you are trying to buy a property), the less clean cut the deal, the more likely it is to get rejected.

Andrew Kiel · Answer

It's totally feasible.  Think of making 3 offers on any property:

1. Cash / very fast close

2. Financed / slightly longer close (appraisal may be needed)

3. Owner finance / short to longer closing based on seller's needs

It's all about finding out the needs of the seller and helping to address those needs.  If you simply don't know or can't easily find out - making multiple offers can be a great way to help meet the sellers needs.  When I make the above 3 offers to a seller, any one of the 3 would be fine with me.  Cash will be lowest, owner financing tends to be the highest (price) offer.

Flipping with Seller Financing?

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