Seller financing Ideas

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Seller financing Ideas

Alex Ramos
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?

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
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@Alex Ramos

hello

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.

did i mention new investors shouldn't sub-to?

hope this helps

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2w

    @Alex Ramos

    hello

    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.

    did i mention new investors shouldn't sub-to?

    hope this helps

    1Reply
  • Hossein Sharifi
    Investor · Member since 2023 · 139 posts · 74 votes
    2w

    @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.

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  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    2w

    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.

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  • Andrew Horowitz
    Charleston, SC · Member since 2026 · 33 posts · 12 votes
    2w

    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.

    Andrew

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    1w

    Alex, seller financing can work even when the seller still has a mortgage, but that existing loan is the first thing I'd investigate. If the mortgage isn't assumable, the seller needs to understand the lender's due-on-sale terms before structuring the transaction.

    From the tax side, I'd also have the CPA model the seller-financed deal before the terms are finalized. A qualifying installment sale can generally spread eligible gain as principal is received, but interest and depreciation recapture can have different tax treatment.

    So I'd think about this in two parts: can the financing structure work with the seller's existing lender, and what does that structure actually look like after tax?

    Once those are answered, you can negotiate the down payment, interest rate, amortization, and balloon around the seller's actual needs rather than just copying a generic seller-financing structure. Happy to connect!

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