How to a find seller financing

Question

I’m self employed, and I’m having a hard time getting traditional financing on my second property. What’s the best way of finding sellers willing to carry the loan? If I see houses on mls should I ask my realtor to inquire, or should I seek sellers in a different way? Thanks in advance for any advice!

Bob E. · Answer

@Mia LeTendre Try reaching our directly to landlords.  Look for code violations and notices of evictions from landlords that have had the property more than 10 years.  Some of them will be tired of the drama and ready to move on.

Galen Ikonomov · Answer

Mia, by saying the second property are you saying you are looking for your second investment property or second home? I will assume you are thinking of 2nd investment property.

The best way to find sellers that are looking to carry the loan is by simply having a conversation with them and to check their "pulse". How motivated they are to sell? Do they have equity in the house? What is the reason they want to sell the house IF they want to sell it? Do they need CASH in their hand right now or it is not that important to the seller?

Considering they say they don't need a cash right now, I would then give them the benefits of Seller financing ( tax benefits, cash flow, no fees, if you default, they get the house back ). If they don't want to hear it, then offer Ballon Payment at some point in the term and also offer a little over asking price.

Mind you, there are multiple ways to approach a seller about seller financing so I am giving you ideas. Everything depends what seller motivation's is.

I would not go through MLS for seller financing. Many realtors would not want to hear it and therefore would not advise their clients to go that route. I would go off market and in Milwaukee, there are plenty of off market deals.

Just a reminder, don't spend too much time convincing a seller, sometimes NO is NO even if you offer them to massage their toes. Rinse and repeat.

Good luck

Tom S. · Answer

@Mia LeTendre  I've had good luck in the part searching on internet sites like Craigslist or similar, using those terms "owner financing, seller financing, handyman special", etc.  People do sometimes post they're interested in selling that way.  You can also try Facebook real estate groups in your area.

The main downside with seller financing, be careful it's not overpriced or full of issues.  Sometimes landlords will try to dump their crappy properties on newbies, making their problem your problem.  Also be sure to get it appraised; the seller won't require an appraisal the way banks do.

Once a good property is located, an experienced attorney can handle all the paperwork.  It's takes a lot of digging, but I picked up about one property per year this way for quite a few years in a row.

Good luck!

Marco Bario · Answer

@Galen Ikonomov -

Great response. Although I’m not a fan of ballon payments. I’ve received too many calls from buyers and sellers finding that the Moore’s Law of real estate seems to make them come at an inopportune time.

If the seller insists on a balloon, at least try to negotiate an option to extend.

Lexey Vezzoso · Answer

Hi Mia!

I think it's definitely okay to ask the realtor to present seller financing to their client, the worst thing they are going to say is no.

Another way to do it would be to skip trace properties and call the sellers directly and offer to buy their home on seller financing. There are definitely people out there willing to do it, it just takes a little bit of digging to get there.

Good Luck!

-Lexey

Patrick Drury · Answer

@Mia LeTendreIf you want to get seller-financed deals, you should start cold calling. Typically, sellers are only willing to seller finance to someone they know from my experience. You aren't going to get a seller-financed deal on the market. So the best way is via off-market deals directly to the seller. I have found cold calling to work the best. You need to cold call the sellers and meet them and build relationships with them and your chances of getting a seller-financed deal go up a lot.

Andrew Garcia · Answer

Hi @Mia LeTendre, there are options for you to get qualified without being forced to use seller financing.

1. Conventional, FHA, VA, or USDA. A lot of lenders calculate self-employment income incorrectly. You might qualify for one of these.

2. Bank statement loan. This is where you are qualified based on the amount that gets deposited in your bank account every month rather than your tax returns.

3. Non-QM full doc. A loan that is underwritten more lieiniently than a conventional, FHA, VA, or USDA loan.

4. DSCR. This is where you get qualified based on the fair market rent of the property, not your personal income.

Hope this helps! Let me know if I can be of any assistance.

How to a find seller financing

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