Seller financing questions

[Brad Ernst]

Hello BP, had few questions about seller financing. I know some one that is getting out of the rental game and selling his properties, few last year and some this year. He hated paying those sold properties obviously. So what would it benefit him by doing seller financing? He's an older gentleman so he doesn't like the thought of managing anymore also. So he would still get monthly checks, I would be the Manager, but would he still have to pay taxes by switching the title into my name? Also what are some pro and cons of seller financing and some steps to start, thank you for responses.

[JD Martin]

Originally posted by @Brad Ernst:

Steve Vaughan Luke H. Thanks for the responses! When seeing seller financing do you see the buyer doing short term loans with the seller? Then refinance into a bank after a certain time?

 You can do it this way but be careful with the language. You don't want to forfeit your ownership if you are unable to refinance by X date. A better setup for you, if the guy is adamant about you refi'ing out by X date, is an escalator clause that pays him more interest beyond certain guideposts. That gives you incentive to refinance but doesn't force you out of your asset if circumstances in, or beyond, your control make it difficult or impossible to conventionally refinance the property.