If you are an investor looking to use creative financing strategies, it is time for you to learn how to talk to sellers about doing a seller financed mortgage.
Seller financed mortgage is also called owner financing or seller financing. So, no matter which verbiage you hear, now you know that they are all the same thing.
The idea behind a seller financed mortgage is that the seller will play the role of the bank. So, for you, the investor, this is a major win because you do not have to worry about dealing with banks or credit or anything like that. It keeps the deal simple and just between you and the seller.
Alright, now that you have the basics, let’s get started.
3 Talking Points to Bring Up to Sellers about Seller Financed Mortgage
Now, if you need to know more about owner financing and seller financing, I have already written a bunch of posts on these topics to get you started. Here are the top ones I recommend if you need more information and groundwork:
- The Simple Guide to Seller Financing for New Investors
- How to Talk to Sellers About Owner Financing
- How to Find Owner Financed Homes the Easy Way
But, if you are all caught up on those main points, let’s discuss some specific tips to bring up when talking to sellers about a seller financed mortgage. The big goal is that you need to help them to understand why this is such a beneficial thing for them.
Let’s be real…they don’t care if it is great for you. They are looking out for #1. So, you need to frame this whole thing from their view.
Got it? Ok, great.
Now, the three things you need to bring up about seller financed mortgages are monthly income, generational wealth, and tax benefits.
Seriously, that’s it. And those are all things that matter to you, too, right?
We are Proverbs 31 women and Proverbs 31:16 says:
She goes to inspect a field and she buys it. With her earnings, she plants a vineyard.”
I want you to go inspect those fields, those fix and flips, those houses, those apartment complexes…go inspect the deals and then BUY THEM.
Then plant a “vineyard,” which means to get your generational wealth set up. Get things situated so that your kids and kids’ kids have more generational wealth coming in than you do.
People are all mostly the same, so the things that are important to you are also going to be important to the seller.
But, in this conversation, you need to stay focused on helping the seller with their problem, which will inherently help you too.
I’m going to tell you a story. As you probably know, if you’ve read my blog for any time, I come from a family who has a long, long history of real estate investing. I learned to invest from my mom who introduced me to “mailbox money” and on the legacy goes.
One time I was helping my mom to work out a deal for some farmland she wanted to own. The gentleman who owned the farm was an older man, who actually had some history with my own family in decades past.
If there is one thing to keep in mind when you get started it is that there is a certain generation of people, the older generation, who usually really loves the idea of seller financed mortgages. They just get it. Also, they are usually the ones who own their properties free and clear, which is absolutely critical for any kind of seller financing (don’t ever forget that).
But, back to the story.
This gentleman had a love for generational wealth. He deeply wanted to make sure that his granddaughter would be taken care of when he died. This is the most important thing to him. So, that was where we focused when we talked to him about the deal.
Point #1: Passive, Monthly Income
In the case of our seller, he was absolutely positive he wanted to provide ongoing income for his granddaughter. But, the fact is that most people are looking for a way to create passive, monthly income. When we spoke to our seller, we made sure he knew that he would receive money every month for 10, 15, 20, or 30 years!
That is some serious passive income.
And, since he was so focused on his granddaughter, we reminded him that he could easily put that money into some kind of a trust fund, too. Then, when he passed away, he would know that she would continue to receive that money for years to come.
Point #2: Generational Wealth
In case you missed it, we talked to the seller about the many benefits of the passive, monthly income. We also reminded him that he would be able to put that money into his vision for generational wealth. If he agreed to “become the bank” with a seller financed mortgage, he would maintain control of all of those amazing financial blessings that come with it.
In one fell swoop, I wrapped two big points into one solid offer. For 10-30 years, he would be able to ensure a generational provision for his granddaughter.
Point #3: Tax Benefits
This final point is a big one. Keep in mind, most of these sellers have already been approached by wholesale investors. They usually only offer about $0.50 on the dollar. This means that a house worth $200,000 would only receive an offer of about $100,000. Then, that sales price would also be taxed, leaving the seller with about $60,000. That is a horrible return for the seller.
So, I explained to the seller that if they do a seller financed mortgage then I would be able to give them the entire value of the house: $200,000. The only difference is that I would be paying it back one little bit at a time for 20-30 years. Again, the seller would become the bank.
Now, the tax benefit for that is (and I’m not a tax person…I don’t even do my own taxes) the seller will only be paying taxes one little bit at a time from what they receive monthly. The taxes work out differently and yet still the passive income would be secured and the generational legacy in place.
A seller financed mortgage is a HUGE blessing for everyone involved.
It provides monthly income, generational wealth, and major tax benefits for the seller. For the seller, it is a win-win-win. And, it is a total win for you, too.
Is this starting to make sense now?
So, are you ready to start digging in to learn all you can about seller financed mortgage? Make sure you check out my FREE masterclass at getyourfirstdeal.com. I have done so many of these deals with incredible success. Now it is my life’s mission to teach as many women as possible how to start investing, too.
Get Out There and Help Some Sellers Today!
Today is the day to start helping even more people. I know that is an important goal and there is no reason why you cannot help others while also helping yourself. You do not have to choose one over the other. That is the blessing of real estate investing. It is the awesome blessing of seller financed mortgages.
So, what are you waiting for? Get started today.