Owner Financing question

[Chris Shimmel]

About 5-6 years ago, before I was really ready to start buying, I met a guy who was doing owner financing on deals. Essentially he was buying the property and fixing it up. He would then sell it on some sort of a contract with a higher than market interest rate. He would require a downpayment by the buyer. All of this was done while having the house itself financed through a local bank. Essentially he had nothing out of pocket. My question is, has any one heard of this type of thing? If so, how on earth does it work? I can't figure out how he can sell on contract a house financed through a lender. Any help would greatly appreciated!