Have you been trying to find owner financed homes but feeling like your running in circles? I have so been there. But, that is why I want to teach you three simple ways to simplify your search. It will make your real estate investment efforts easier.
I’ve been investing in real estate for a few years now and have tried just about every trick in the book for owner financing deals. Money has been lost, lessons have been learned, and successes have been achieved.
There’s one thing I know, though, and it is that in order to really make this machine flow, you need to have a steady flow of properties to invest in. And, today, I’m going to teach you some easy ways to find them.
How to Find Owner Financed Homes the Easy Way
Before we dive in I want to do a bit of a recap. Sometimes we get moving and grooving with real estate before we truly understand exactly what is going on, so I want to step back a moment to cover some basics.
First of all, what exactly is owner financed housing? Well, I’m glad you asked! Owner financed houses are houses that are owned “free and clear” by the owner. “Free and clear” means that there is nothing owed on the property; no liens, no mortgage, no nothin’. The only thing the owner pays on that property is the annual property tax (because no one escapes those….)
But, what in the world is owner financing, Whitney?
I’m gonna tell you…
When a seller owns their property free and clear it means that they have the right to do with it as they please. This includes when they sell it to you! And, since they don’t owe anything to a bank or firm, they become the technical “bank” and you pay them the monthly cost. You no longer need to do business with a traditional lender, but now get to dig into creative financing options. This one is called “owner financing.” It is when the owner is the one financing the property transaction through predetermined monthly payments from you for a predetermined purchase price.
Let me explain it this way: Suzie Q owns the property at 123 ABC Drive, but she is tired of it. She inherited it from her mother who passed away, and she never had any intention of doing anything with it. We talk and discuss how I can help take the property off of her hands. And, I explain how she will make money every month in the process. We decide that the house is worth about $150,000, and I have 4 years to pay off the full mortgage. But I will pay $750 each month for “rent” (my monthly payments), and $500 of that money will go towards the balance (of my purchase price).
So, after we make the deal, sign the contract, the terms begin. After the predetermined period of time, I begin making my monthly payments. But, instead of paying a traditional mortgage company or bank, I pay this homeowner! They are the technical lenders of the money, but the seller does not hand it out to me all at once. Instead, I simply pay for it in pieces until I can officially purchase it within four years. Got it?
And, Who are Owner Financed Homes Good For?
In my experience owner financed homes are really ideal options for people in some common circumstances. The most common ones I’ve seen are:
- Tired landlords and “Bridge People” – Usually a current landlord who is ready to move on, or is overwhelmed by the number of properties they are currently handling. A “bridge person” is someone who repeatedly upgraded their housing because of their family size or life situation. But, along the way they held onto previous homes to rent out. Now they are overwhelmed by all of them and need to get rid of a few.
- People who need to move quickly – Maybe a new job has come up in a different state, or a life circumstance, and they need to move away from where they currently live. They don’t want to deal with the headache of trying to sell the traditional way with an agent.
- People who inherited the property – Usually these people are not looking to manage a new property and are not interested in the time investment.
They just want to get rid of the house and be done with it.
- People who forgot they owned a house – These properties are usually empty, abandoned, and vacant, usually in a bit of need for repairs. These owners are not unlike the people who inherited the property. They just want to be done with it.
- Financially Strained People (“broke”) – For these people an unexpected financial situation has put a strain on their cash, and now they can’t afford their home. For them, this kind of a deal would help alleviate the property situation before they default on their payments and head towards bankruptcy.
Sometimes you’ll have your outsiders who have unique situations. But, these are the most common reasons that an owner would be super interested in an owner financed plan.
You can probably tell that in the above situations the owner is kind of in a bit of a life struggle.
They have life circumstances that are adding a burden and stress to their life and they don’t want to add to that the sale of a house. This is where you can come in and help them. If you are honest and have integrity, you can work with them to find an offer that works for everyone. By doing this you help them to be able to focus on their other situation, and not the house.
Owner financing is fast.
A deal can be made in one day and a signed contract can be made in a week, if need be. It is great for the sellers because it gets them in a position to receive money each month. And it simultaneously takes care of their property problems. It is great for investors since it is not through the snail pace of a bank, and can move along very quickly. In addition, owner financed homes do not require a credit pull against you, does not hold you up from buying more houses (like a traditional mortgage would), and leaves you with more options (like buying land).
Truly, owner financed homes are a win-win all around.
Now, the bread and butter…
How do you Actually FIND Owner Financed Homes?
There are a lot of different ways to find owner financed homes, but I am going to tell you the most effective ones for getting started in the process. My ultimate goal for you is to have the leads for such houses dripping in to you on a daily basis. This is what I teach in detail in my FDDF course, but these are the key tools when you’re just starting out.
Before you can really find and use a tool effectively, you need to know where you want to focus your search. I call this your “honey hole.” Your honey hole is the preferred locale where you will own your homes and operate your investments. The reason this is important is because my goal for you is that you become the go-to investor in that area. Your name is the name I want everyone to know and remember whenever they or someone they know gets into a situation where what you do can help them.
So, once you know your honey hole, these are the tools you will use:
Zillow (“the Big Z”)
I’m sure you’ve heard about and probably used Zillow before, but this tool is a goldmine for finding homes. Just by using their search feature you can select “for sale by owner” homes and get a list of homes under that category in your target area. Now, be aware that some agents mistakenly (or slyly) list homes on Zillow as For Sale By Owner, but these are not the ones you want to work with. You want the tried and true ma and pa sellers.
Another option you can also select is the “make me move” box. This is another way that sellers are testing the market to see what kinds of offers they might receive if they were to try to sell their homes.
Craigslist is a little less orderly than Zillow, so it can feel a bit more like searching for a needle in a haystack, but I assure you there are still awesome deals on there. When you find your specific target area, just simply do a search for “for sale by owner” to see all the options. Don’t be like the other guys and start spamming Craigslist with the “I buy houses” posts. Just don’t. This is not effective and it just makes you look needy. Instead, though, you can set-up alert emails through Craigslist so you can receive updated additions to this search when they appear.
You can also use Craigslist as a tool to practice your methods and scripts for talking with sellers without even approaching your specific market. That way if things don’t pan out and you flub something up, it won’t affect your target area. As an added bonus, your practice efforts might just land you an unexpected new deal, like it did for one of my students.
Facebook (to play the long game)
This tool is a bit different than the other two I have discussed. The reason for this is because it is not an active tool that you can just search. Rather is a passive tool that can be a magnet for ongoing deals as the weeks/months/years pass. You will be surprised by how many people start coming out of the woodwork. They will want tell you about their situation just because they see your posts about the things you do. Post about the houses that you are working on, or the deals that you have made to help your sellers.
Tell the story about how Jenny Gaulifa approached you in the Target parking lot. And now you have a new deal to finalize so she can move in with her new husband. Every time you share what you are doing and the fact that you “do real estate” (without ever saying “I do real estate” and trying to make it all salesy) you plant a little seed into the minds of your friends. Then, when either they or someone they know have a situation where what you do overlaps with what they need, they are going to come to you. That’s the golden ticket to all of this, and ultimately my goal for you. It’s why I go into such depth on this topic and how to use these tools in my course.
The Tools are Just Tools…You are the One who Makes them Matter
Ultimately, these tools will not do the actual relationship and connection work for you. They are just tools for finding a property. You are the mouth and person behind the tool. I am a big advocate for dealing in what I consider the right way. These are people, not dollar bills. They are facing real life struggles that are causing a big strain and you need to be sensitive to that reality.
You need to connect with their heart and their real why for selling, not just throw a bunch of math at them about the deal. I know a lot of gurus don’t talk about this, but it is crucial. It’s my main teaching with all of my people, because it is critical. Don’t overlook it. Be a person first.
Dive Deeper So You Know How to Handle Every Situation That Comes Up
The tools I have showed you are super simple and easy to use in order to find owner financed homes. But the real meat is what you do once you find those homes. This is why I have created my First Deal Done Fast course. I teach every single step of the process from finding the property, to talking to sellers, to signing the contracts, and on.
I love working with my ladies and making sure that everyone knows exactly how to handle the situations that come up. We also have a thriving Facebook group that is full of lively sharing. Enjoy the victories, successes, struggles, and encouragement from other new investors who are a few steps down the road.
If you’re serious about trying to find owner financed homes, you owe it to yourself to know what to do with them when you find them. Learn more about the course here and jump on board. I look forward to helping you meet your goals!
You Can Find Owner Financed Homes without the Stress
Now you know all about owner financed homes, and how to track them down. Remember, both the immediate goals of finding new homes, and the long-range strategy are important. Both combine to make a well-rounded plan for having a constant stream of homes to work on. Find your honey hole, search out the homes, and be a person when you’re working your deals. Then, come back to tell me all about your successes!
What are some other ways you have found owner financed homes? Comment below to share what you’ve found, too.