How does real estate make money

[Akkiemaj Frederick]

I am a little confused. I finally lined up a few properties where the owner agrees with seller financing but I'm not sure of the terms that I should agree to. Why would I agree to pay more than the sellers are asking... Same with the bank why would I finance a property thus ending up paying more than its value due to interest?

The property is at 40000 oh, the sellers agreed to 4% down with 6% interest. But how long should I agree to the terms. I definitely don't want to have negative cash flow and want to turn some profit even if it's $100 a month but that would bring me-too about 7 year finance unless I do a balloon payment after a few. Still the process is better than a 30-year FHA but how do we make money if we are paying so much for a property that's not value this much?