Seller financing with mailers

[Jonathan Orr]

I have started doing some mailers and I was talking with a friend who is working with a guy who is doing a lot of seller financing commercial deals.  It sounds very interesting, however I am looking to those that have done a lot of seller financing deals (no money down) to see how they structure it.

I know how seller financing works, however I want to know how you typically see the most success in deal structures. Do you find more success in getting a 1st then having the owner carry a 2nd?  OR would it be easier to try and have the existing 1st transferred over and the owner carry the remaining portion? any pros or cons would help

If there is any other ways you have done a seller finance deal, please let me know!

[Steve S.]

Transferring existing 1st can be more of a hassle than anything. The loan company will scrutinize you just as much, if not more, than if you applied for a new loan from them. Assuming a loan is very tough. 

In carry back transactions things seems to work out better when it is in 2nd position. Lenders want first position (always), so give it to them so you can get the bulk financing you want.

Some sellers will carry back the full thing, or with a small down payment, but they are hard to find. If you're trying to do this then have a streamlined and detailed exit strategy so they understand how long they will still not have their money and how they will get it. If it is a fix or flip it tends to work out better.

Lastly, there are options out there in the world that make sense where you can borrow the funds and not deal with the carryback altogether. If I were you I would explore all possibilities and go the route that makes the most sense.

Remember... maximizing return and minimizing cost is always important, but actually getting the place to buy and flip or invest in so you can make the real money matters the most. I have seen so many people lose out on $100,000 ROI flips because they are trying to save 1% on a rate or 1% on fees. Their over indulgence to get the best deal on financing and save $500 cost them $100,000 in profit.

Best of luck.