Santa Cruz, CA · Member since 2026 · 3 posts · 1 vote
Looking to understand seller financing more. What are great resources or books to learn more about the topic? My specific question is how would seller financing work with a seller that still has a balance on their mortgage without an assumable loan? Any experience with how the pay structures would work and how to set that up?
if there is still a balance, that's not seller financing, that's sub-to. related but much higher risk strategy. IMO not something a beginner should do.
i learned to seller finance by listening to the wholesale hotline podcast, but applying the tactics to paid off properties only.
if there is still a balance, that's not seller financing, that's sub-to. related but much higher risk strategy. IMO not something a beginner should do.
i learned to seller finance by listening to the wholesale hotline podcast, but applying the tactics to paid off properties only.
@Alex Ramos What you're describing is usually called a wraparound. The seller sells to you on a new note and keeps paying the existing mortgage out of what you pay them.
Simple example: the seller owes $150K at 3.5%, about $674 a month. You buy at $250K with $25K down and a $225K note at 6.5%, about $1,422 a month. You pay a third-party loan servicer, who sends $674 to the bank and the rest to the seller. The servicer gives both sides proof the underlying loan is getting paid.
The catch is the due-on-sale clause. The bank can call the loan once title transfers, so have a plan for that, like a refinance deadline, written into the deal. Get a real estate attorney to draft it and check your state's seller-financing rules first.
The strange irony when it comes to seller and/or creative financing is that they should really only be done by experienced investors with a pile of cash reserves and/or lines of credit. They are pitched on the internet as a way to get into real estate investing with little to no money. That's a very high risk strategy that needs everything to go right for a deal to work.
Seller financing and sub-to are two way to structure a deal. They both fall into the creative finance bucket. My opinion seller financing is the easiest and most straight forward. Basically the buyer and seller works out the terms. Be sure to always have an attorney look everything over.