Owner Finance Marketing

[Troy Stoehr]

I'm trying to expand my buy and hold portfolio via owner financed deals. Any ideas on how to market specifically towards these deals?

[Bill Gulley]

Thanks, that makes sense.

Your loan limitation will exist later on too, unless you payoff or sell others, so to say refinance, the issue will still be there. You need to get into the commercial side of your bank.

My most successful approach was targeting older landlords. The pitch is basically "aren't you tired of fixing things, collect late rents and cleaning up units"? I went at it as a retirement plan that allowed close to what they would receive less maintenance, taxes and management. I had bulk purchases as these old timers had accumulated several properties.

Terms with a 30 year amortization are not difficult to work in as rents support such financing and the landlord understands a 20 to 30 year amortization.

The balloon is more of an issue. Then you point out alternative investments paying interest at the note rate. If they are retired, what is the requirement for a lump sum? Most will agree, they don't need it all and pay taxes on gains, one aspect most don't like especially when the acquired properties decades ago. If there is some need for more money, you can break down lump sum payments into smaller amounts. This is where you may get creative, say providing a smaller lump sum each year for five years, that might help putting a grandkid through college.

IMO, older landlords are the best target market for buying seller financed rentals. Then, you can always make the same offer to any owner. It will depend on your market and homes targeted as to what you go after.

Selling yourself to a seller is important, don't blow smoke at them but stress your ability to pay as agreed. The approach to take is to have them consider selling, find a price agreed to, then interview them as to their needs, meet the need in devising terms, set an interest rate they can't obtain elsewhere. All along ensuring your side provides the cash flow desired, justify your needs with maintenance and management, taxes and vacancies. Arrive at a payment and move into closing your offer. I'd always give a little comment, "well, that's a lot better income than working for the difference....or for fixing toilets"

I suggest you get advice on setting up the technical side, drafting the note and making sure that you're not doing crazy stuff that is not down a more conventional road. Conventional does not mean you can't be creative, but creative isn't just any nutty thing someone can dream up either. Use an attorney. :)