How do I profit off of a seller financed property?

9 Replies

I know this sounds like a dumb question, but as simple as this question may seem it has me pretty perplexed. I mean I suppose I would just want to structure terms, where my payment to the original seller is drastically less than what the rent is, but I don't see that being enough for reserves, expenses and whatnot, but I guess that comes down to the terms. Any other creative ways to profit on this kind of deal?

P.S. Sorry this seems so broad, but just looking for some ideas!

Thanks Brianna! I've listened to it several times now and I don't mean using subject to, but actual owner financing with the owner acting as the bank. I guess I kind of answered my own question which is why no one responded.

The deal just has to have enough room to where I profit with a tenant.

Originally posted by @Brianna Schmidt:
@Junior Salters check out this podcast - they talk all about it

They talk about issues that have been addressed in the forums with predatory and illegal issues. The podcast you mentioned Brianna should probably be removed. IMO, it's the worst podcast on BP. It's not the fault of management as they are not in the business of policing whatever someone wants to say, they also mentioned several times to seek legal advice. Obviously someone has not sought legal advice before suggesting going to this "broadcast" Grant has not posted since the issues were brought up in the forums. I don't know what happened to him.

What I do know is that if I had a mortgage originator in my company that put that information out in that manner on the internet they would not be working there the next day.

Junior,

Man, I really am at a loss as to what to say to you on your question. It's really obvious that you lack knowledge of financing matters. I can fly a helicopter, I can't fly a jet fighter, I don't have the knowledge or skills required to fly a jet fighter. I'd rather not crash and burn so I don't get into jet fighters.

What just astounds me is that there are real human beings that can not fly a helicopter or even a remote control airplane yet they are eager to get into a jet fighter. Where does that thinking even come from? Obviously they don't understand the dangers or seriousness taken in financial transactions. Jokers to the left of me, clowns to the right, here I am......, right back in the middle again.

I erased a long post, nothing said that hasn't been said here before. If you are interested in understanding seller financed issues, start searching. Get some better understandings and ask more specific questions. :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

Originally posted by @Junior Salters :
Thanks Brianna! I've listened to it several times now and I don't mean using subject to, but actual owner financing with the owner acting as the bank. I guess I kind of answered my own question which is why no one responded.

The deal just has to have enough room to where I profit with a tenant.

Yes! Stay with that thought, get financing that is half as much as your rents and you should do fine! :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

I agree with Bill - while you'll need to plan for as many of the expenses as you can upfront (maintenance, HOA if any, water bills....etc) If you can have your payment half of market rent you should be ok

@Junior Salters

This forum are for dumb questions no matter what!

lol "if you don't know what you don't know", that's what BPs all about is asked questions, so don't feel stupid or inept, this is where you can ask what ever you want submission!

@Bill Gulley is probably the sharpest regulator I know the United States.

He's trying to protect people from making huge mistakes and thinking that you can do something anyway you want.

Seller financing you cannot do whatever you want.

This is what you can do.

One: go find a really good contract attorney that understands seller financing, wraparound mortgages, subject to existing financing, creating notes that can be sold in the marketplace (note brokers), the ability to repay rule from the CFPB, the safe act, Dodd Frank, TILA, RESPA, etc.

Two: go find an RMLO that's willing to underwrite any seller financing buyer. It's not easy. Start with Mindy Henderson.

https://www.linkedin.com/in/mindykhenderson


Three: market for low equity properties. Explain their choices to them:

a, sell with an agent and pay the cost to sell, which averages 10 to 13% of value of the house,

b, rent it out and wait for the market to recover, or

c, look at the ways to sell on terms to perhaps avoid the costs to sell.

Here's a few facts:
you can't discuss terms of seller financing without being licensed.

See this link, courtesy of

@Curt Smith

http://www.biggerpockets.com/forums/83/topics/131229-dodd-frank-co-re

The state of Colorado is getting strict about real estate agents and brokers not even approaching talking about seller financing sellers, because it errors and omissions insurance or E and O wont cover it.

I think that's fantastic news!

It is a great opportunity to an innovative real estate investor to be able to go talk to sellers that aren't licensed, and look at assisting the seller with either:

1. Buy on subject to or buying on a wrap, and then renting it out or doing a simple lease with option without any rent credits. A straight option with a lease, with the ability to renew the lease and the option, at least at this time, is not come under Dodd Frank. @Bill Gulley, correct me if I'm wrong.

2. You could offer to lease with an option with the understanding that you are going to assign the deal once you have equitable interest in the property. This is called a lease option assignment, cooperative assignment, or wholesaling lease option. It's important to get equitable interest first, so you are not brokering, or "acting agent for".

Buying without banks or credit is great, but you must know what you can't do.

And you need a great team. If you have an RMLO that understands the ATR, and can sign off on your originations, you're fine.

And you need a local attorney that can help you with your paperwork.

Because with seller financing, you can get in hot water.

The civil fines and federal busts that can put you into an orange jumpsuit faster than you can say "San Quentin".

I'm so happy that agents will be so scared of seller financing so that I can talk to expired listings in peace and not have them in my way of helping sellers sell on terms.

@Bill Gulley, I'm going to start a thread called,
How to talk to sellers about seller financing.

I hope you'll join me.

Medium banner reiskills 997   copyBrian Gibbons, REISkills | [email protected] | 818‑400‑3046 | http://MyREISkills.com

The more regulations put in place by acts like Dodd Frank the more freedom we lose to be entrepreneurs and live OUR American Dream.  REGULATE< REGULATE< REGULATE! I guess that's the mantra of our current elected Federalists. Maybe Patrick Henry was right? Its just sad a few bad apples spoil the bin for all of us. I digress; Anyways..

@Brian Gibbons  did you start that thread yet? I did a search and couldn't find it.

@Junior Salters  50% of the rent is the most you structure your deal, as mentioned here. However from what I see (I'm not a buy and hold person, but coming around to it) this won't work everywhere. Good luck trying to do that in Northern Virginia!

Originally posted by @Account Closed :

REGULATE< REGULATE< REGULATE!

 Close, but its REGULATE>TAX>SUBSIDISE>REGULATE>wonder where all the jobs went>blame capitalism

Buy seller financed property from a seasoned firm that offers cash flowing deals with 10% down 30-year non-recourse money