What is Seller Financing and How Does it Work? [#AskBP 074

owner financing homes in nc This is a topic that many people are looking for. star-trek-voyager.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, star-trek-voyager.net would like to introduce to you What is Seller Financing and How Does it Work? [#AskBP 074 . Following along are instructions in the video below:

“On the ask bp podcast. We re talking about what exactly is seller financing and and how does it work for both parties stay tuned. You re listening to another. Ask bp podcast.

Where you ll hear short. Direct answers to your biggest real estate. Questions. Submit your question today on facebook.

Twitter or the biggerpockets forums by using hashtag. Ask bp and don t forget to pick up your copy of the ultimate beginner s guide to real estate investing at other great content. When you sign up for your free account at biggerpockets com. With that let s get to the show hey.

What s going on everyone my name is brandon and you are listening and or watching the ask bp podcast. The show that we bring you every single weekday of the week. Does that make sense to answer your burning real estate questions. And today s question comes from tristan from san antonio and tristan asks could you explain how owner financing works from the perspective of both the buyer and the seller.

I like this question a lot because a seller financing is a very very powerful strategy that i ve used and i love and i think i m going to use more and more going forward. I ll explain why in a second. But tristan. Let me answer your question so how does exactly seller financing work for those people who are not familiar with the concept of seller financing make sure to explain that first so when you own a property you can do a couple things you can sell the property and somebody can come and pay you cash for it right they could give you if you re selling your property for.

100000 they could come and give you 100000..

In cash and buy. The property. They could also come and give you a hundred thousand dollar loan from the bank. They can go to a bank get a loan and then the loan pays you the hundred thousand dollars.

Or you can sell your property using seller financing. Which means you sell it which means they actually buy it they take ownership they take title it s their property. But you lend the hundred thousand dollars to the buyer or at least a portion thereof and so let s say you offered that if the buyer came and put down a twenty thousand dollar down payment you would finance you would act like the bank and you would lend them the eighty thousand dollars. Which then they d pay you i mean you d it s a it s not really like you don t actually hand them money.

But that s kind of how it works right back you re lending them the money so they can pay you 100000. Or whatever. It is so that way they can make monthly payments. So you are becoming the bank.

You are the lender. You are now a note investor. We call that and so that s kind of how seller financing works on the on the seller side now on the buyer side of course. I would come to you and i d say i want to buy your property for.

100000 and i will put down a 20000. Down payment or ten or fifteen or five or whatever you negotiate and i will pay you every single month for whatever length we negotiate now a lot of seller finance deals are shorter term they don t have to be they could be 30 years just like a typical bank. But that s kind of how it works so you can see the benefit there for both the buyer and the seller the seller gets monthly payments every single month remember a minute ago. I said how i think seller financing is going to be really great going forward and i m gonna use a lot more of it here s why because as the baby boomer generation.

Gets older as they are done they don t want to manage the real estate..

Anymore. They don t want to just deal with all that junk anymore they might want to get out of the game. But they don t want to lose that income they ve been receiving on their properties for years so what a great win win situation that we re gonna see and increasingly so in the coming years is these baby boomers will be selling their properties using seller financing. So they can keep getting the money every month coming in and you as a buyer should be able to buy them with seller financing.

Now a couple things to be careful of with seller financing. Number. One seller financing works best. When the property is owned free and clear.

In other words. The seller cannot or should not have a mortgage on the property in order to sell it now. There is a way to do that there are things called like subject. 2 and wraps.

But we re not gonna do that today. But because the difficulty is this if you sell a. Property let s say you own a property and you sell it for 100000. But if you oh and you re gonna do seller financing for a hundred thousand but you owe the bank 80 thousand well the bank that you owe the money to there s a there s a clause in your mortgage that you signed most likely almost every mortgage has it that says that if you sell the property you need to pay them back or else they could foreclose on you now i mean they re going to but they probably there s a very good chance that they will and so the idea of that it s called the due on sale clause.

That you have to the money is due that you are the bank when you sell the property do on sale and so it s very important that due on sale clause. You don t want to violate that list. It s very risky to do it now some investors just do it anyway and they hope for the best uh and but i generally advise don t break the due on sale closet. You know unless you have the money to back it up in case.

Something goes wrong..

So that s the main thing you had to look for when doing seller financing is ideally. It s only going to be used for people who own the property free and clear now when i was doing research for my last book. The book on invest in real estate with no and low money down. I discovered this astonishing fact that 30 percent of all homes in america are owned free and clear so you might think that s hard to find.

But in fact a third of all the homes you see are probably owned free and clear a third of all the properties out. There might be prime and ready for you to buy with seller financing. So that s kind of how seller financing works from both ends. The one final warning about seller financing.

A lot of investors like to sell properties with seller financing. Especially shady. Investors. They ll mark up the price.

Way too high. They ll charge a huge downpayment knowing that they re going to foreclose on you in the future because you won t make your payments and so that that is a problem in the industry. That some people do so just make sure that even if you do in seller financing. Make sure you re still getting a deal that s going to cash flow for you or be in an area that s gonna appreciate good so make sure you don t just like buy a deal that s a terrible opportunity just because it s seller financing just seller financing is one part of the puzzle.

It is not a make or break on a deal. The numbers are what really matter so do your numbers do your math. And hopefully you can find a great seller finance deal actually did that on my 24 unit. We seller financed that for several years on my 24 unit apartment complex worked out great for me or great for the sellers.

It was really an all around fantastic experience..

So i highly recommend it alright let s get out of here. I want to do. Today. s success cool.

Today comes from good ol. Al einstein albert says you have to learn the rules of the game. And then you have to play better than anyone else those are the two things you got to do in order to succeed you got to learn the rules of the game. And you got to play better than everyone else and so that s why you re here today listen to the spp podcast.

Because you re learning the rules. And you re getting ready to play better than everyone else so go out there play and play hard and play good. So with that let s get out here remember in your pursuit of your dreams for real estate domination. Don t just learn.

But take action for the spp podcast. My name is brandon signing off you ve just heard another episode of the biggerpockets ask bp podcast submit your question today on facebook twitter or the biggerpockets forum by using hashtag ask bp and for more incredible real estate investing tools and education. Including a free download of our book. The ultimate beginner s guide to real estate investing head over to biggerpockets comm and sign up for your free account.

” ..

Thank you for watching all the articles on the topic What is Seller Financing and How Does it Work? [#AskBP 074 . All shares of star-trek-voyager.net are very good. We hope you are satisfied with the article. For any questions, please leave a comment below. Hopefully you guys support our website even more.


Leave a Comment