With all the increased interest in real estate investing, it is time to pause and look at seller financing as a super viable option for new investors.
I know we’ve got HGTV and a plethora of podcasts covering the ins and outs of real estate investing. So, it can get a bit confusing and crowded trying to figure out which path is best to choose.
And, seriously, I get it. Not many years ago I was in your exact same boat. I was working 12 hour days at a dead-end desk job that I hated, praying for me next vacation weekend away.
But, when an opportunity came a-knockin’ and real estate investing fell into my lap, I figured I had to give it a real try.
BOY am I glad that I did!
My entire life has changed for the better. I made some bad calls and took some hard knocks those first few months, but I learned. Then, I got wind of seller financing and the amazing glory of lease options, and everything changed. Over the next 9 months, I exploded my income and made nearly $140,000!
So, today I want to give you a breakdown of exactly what I did to change my life: seller financing. Let’s do this.
What is Seller Financing?
Ok, let’s start with the easy stuff. Seller financing is exactly what it sounds like: the seller is the financing body in the mortgage arrangement. To be more clear, the seller owns the property free and clear. This means they do not owe anything on it any longer.
In other words, the owner is not still paying a mortgage on the property. But, they are willing to act sort of like a bank for you, the investor, and finance you the house. This is done for a predetermined amount of time with specific monthly payments paid to them. You may also hear this setup called “owner financing.” It is a short and sweet concept, so do not make it more difficult than it needs to be.
There are LOADS of different ways to get into and make money off of this arrangement. The easy concept is that the seller acts as the bank, and you become the homeowner. You do not need to secure a home loan or give tens of thousands of your hard-earned money to the seller, either.
Seller Financing Provides Ample Benefits for Investors
As I mentioned, seller financing simplifies the house sale process substantially. No longer do you need to deal with banks and credit pulls, mortgages, and loans. Instead, you get to deal directly with the seller to come up with a payment plan for the purchase price you both agree to. There is no credit pulling and often the owner does not want any money down. Typically, they are just thrilled to get your ongoing residual payments until you finish paying off the purchase price.
Another fantastic benefit for you as an investor is that this kind of deal does not show up on your credit report. So, this arrangement has no bearing on your ability to access other loans. Ultimately, this means that you are not limited in how many houses you set up with seller financing.
Unlike with a traditional mortgage, creative financing methods like seller financing are not controlled by the banks and it’s monetary limits. It is a way to close a deal only between the seller and buyer, so you can set up as many of them as you like without it affecting your credit. For investors, this is a GREAT thing.
How to Spot Sellers Perfect for Seller Financing
Let’s be real here, owners who would likely be willing to consider seller financing are not shouting it out to the world. You won’t find any billboards or online ads from these people looking for you. Sorry, love. YOU have to create these deals, even though there are some things you can do to find owner financed homes. But, first, you need to know how to spot them!
There are two types of sellers who are PERFECT for this kind of housing arrangement. They are “qualified” to do seller financing (in my book). These people are 1) people who inherit a property from a deceased relative and 2) tired landlords.
Here’s why: people who inherit a house usually do not live in the house they inherited. They may live out of town or out of state and are likely not interested in moving back into mom and dad’s house, or investing out of state. They also do not want to put money into fixing up the property in order to sell it at a decent price.
It just becomes more work than it is worth for them, and is a problem they want to get rid of.
The second group that is amazing for seller financing is the tired landlords. A tired landlord is probably someone who got going a decade or so ago. They bought a house in order to be a landlord, and have gone through the regular cycles of maintenance, upkeep, and filling tenancy, but they are DONE. Basically they have hit a point of frustration and exhaustion with where they are and what they are doing and they know it is time to move on.
These are the people who are DYING to meet you and work out a solution to get that property off of their hands!
Now, when you meet with these people, it is your job to stay focused on their needs and the issues that this house is creating for them. Ask questions about THEM. Even repeat back to them the things that they are looking to do, and the reason they want to get rid of the property. But, make sure you are genuinely interested in helping them. No one likes to feel taken advantage of, so make sure your heart is in the right place when talking to sellers.
Remember, these people are in the trenches emotionally, and you get to come and provide an honest to God solution for them to stop struggling. Listen intently and with honesty if you truly want to close the deal with them.
Are you serious about seller financing?
Are you ready to learn everything you need to know to become a successful new investor? If seller financing, owner financing, and the wide variety of ways to become successful are your interest, then be sure to check out my premier course, First Deal Done Fast. You will not believe the success stories my ladies have had.
Sheila continues to blow me away with house after house that she finds to make deals! She made over $13,000 on her first deal and has continued to explode her income month after month.
Janine doesn’t even do this full-time and she STILL made $87,000 last year! That’s incredible. I have story after story with my ladies just like this, and I can’t wait to share your story next!
Don’t waste any more of your time waiting. You’ve got to check it out.
Be sure to also join the Facebook group so you can see for yourself how the group is doing deals and changing their lives with First Deal Done Fast’s info!