Wholesaling and Owner Financing

1 Reply

Hello, I am a wholesaler and I am hoping to find a buyer for a seller that would be happy to owner finance and I have some questions. The potential buyers are all interested in flipping the property, not keeping it long term. Would the seller and the buyer negotiate these terms AFTER the seller and I put the house under contract? Or do the seller and I negotiate those terms and THEN I present those terms (along with sale price) to the potential buyers? Also, is the interest (say 5%) for the full purchase price and paid each month? Or is the 5%  divided for an entire year? Are the down payment and mortgage payments then subtracted out from the final price once the house is sold? Would this change anything on my end, payment wise?  Sorry...this is a new concept to me. Here's an example of what I'm thinking it would mean for the seller and buyer...please correct me if I'm misunderstanding:

Purchase price: $500,000

Down Payment: $10,000

Monthly Payments: $2,000

Interest (5%): $2,083 

Amount paid (less down payment) in 3 months: $12,249

Balance due, once house closes: $484,000

Is this correct???

@Melissa Hoffman You would be negotiating the seller finance terms, as part of your purchase agreement. And since you're a wholesaler, you would then be passing those terms onto your end buyer. The interest is whatever you decide with the seller (interest only payments, or principal and interest payments), but typically the stated interest rate is for the year (unless noted other wise), so in your example 5% a year. And you're down payment is subtracted from your purchase price, to get you the starting loan balance, on which your payments are based on. So to correct you example:

If doing interest only payments:
Purchase price: $500,000
Down Payment: $10,000
Base Loan Amount: $490,000
Interest Only Monthly Payment at 5% annual interest: $2,041.67
Loan Balance due (after 3 months or 360 months), once end buyer flips/sells home: $490,000

If doing Principal and Interest payments, with a 30 yr amortization:
Purchase price: $500,000
Down Payment: $10,000
Base Loan Amount: $490,000
P&I Payment per month at 5% annual interest: $2,630.43
Loan Balance due after 3 months, once end buyer flips/sells home: $488,226.35

Hope that makes sense.