Seller financing with a mortgage?

[Kameron Grady]

Has anyone ever done a seller financing deal where the seller had a mortgage on the property?

Also looking for advice on investing out of state on SFR.

[Justin Hammond]

@Kameron Grady, Yes I have done this. The mortgage doesn't necessarily need to be paid off. You can do what is called a "wrap" mortgage, or an "All Inclusive Trust Deed". I have been on both sides of these and they work fine.

You don't need the bank to be ok with it. You do, however, run the risk of the "due on sale" clause contained in most mortgages. This clause just says the lender has the RIGHT to call the loan due in the event of a title transfer. It doesn't say they need to be notified, it doesn't say the loan IS due.... Just that they have the right. 

I have triggered the due on sale clause probably 150-200 times and I've never had a loan called due. that doesn't mean it's not a risk, but it's a risk I'm ok with on most deals.