Is Seller finance right for me???

[Juan Rodriguez]

As I've recently gotten back into the market actively pursuing deals after some time off to recoup from a couple bad partnerships. I've come across a lot of "investors" and I use that term lightly! That are like piranha in a fishbowl! Now if you're a newbie I suggest you stay away from any seller/owner finance deals until you're a a 100% comfortable with verbiage and can negotiate well! Otherwise one of these scumbags is likely to take advantage of you, your hard work, and your equity! All with one simple clause.

One of the biggest issues I've come across has been the level of sneaky, snakey, scroogy type greed amongst the "investors" willing to do seller/owner finance. Let juxtapose my position with a few examples. I recently csme across what appeared to be a great deal! Owner finance $800 a month payments for a year while you rehabbed and flipped it. Sounds great right?! Heres the kicker they wanted $60k down payment it's amortized. But and this is issue # one, none of the $800 a month is going towards the principle. Zero! Not even a dollar! Okay, not ideal but its common and its a motivator to not carry it that long. Issue # two! There's 3pts being charged. Seems a little excessive! Issue # three the interest being charged is 10%. Issue # four there's a clause that states foreclosure can start at any time a lien is placed on the subject property and or a payment is more than two days past due. Grantee can deny payments and begin foreclosure. I see that as an opportunity to come in as the rehab is partially or mostly done and they get to foreclose and keep the subject property to finish and resell at market value.

Now, I'm all for making a profit, but I'm completely against taking advantage of people. This was offered on a public site and it was labeled as a "New Investors Dream". There were some other quirks as far as the terms regarding extensions and balloon payments, etc. But if we're to help each other these practices should be revised. This way of doing things isn't helping a new investor. Its not even helping an experiences investor who may be starting over.

Last issue with this is, these are the same "investors that when they work out a deal it's always one sided in their favor. They'll get zero down or a dollar down payment subject-to for 20-30yrs, low to zero interest, and will give homeowner pennies on the dollar. The only one benefiting is the middle "investor".

Then the other side to that is when they sell. They sell as close to market value as possible and sprinkle so much lube on it you think you're getting a sweet deal! If you're a newbie very cautious of those types of deals.

First thing! Learn to read the contract in its entirety and don't just get excited to have a deal. It could leave a sour taste in your mouth and you could give up on your dreams because of a few greedy people. Stay away from double digits unless you know you can pull off the rehab and refi or sale in 3months or less.

Secondly, when choosing a deal make sure you use all the tools available to you that BP has to offer! Thats a great starting point on knowing whether that house/condo you have to have is actually worth it.

Third, network with people and tell them about your deal or potential deal. They may want to help you and if it really is a good deal it would be a no brainer. Don't be afraid to ask for help or clarity on things you don't understand. Look to bring value to whoever you reach out too. Be cognizant and offer a percentage of profits. Be creative!

Fourth, get a lawyer, title company, and realtor that have your best interest. In short build a team!

Keep looking there are some decent investors that will work with you on seller finance deals but you need to sift thru them! Theres more greedys than givers! Happy hunting and investing!!!