What's Your Seller Finance Story?

Question

Looking to hear any and all seller finance stories revolving around you (the buyer) landing a seller finance deal, and all the steps it took to get you there. Did the deal land in your lap somehow or were you actively looking for a seller finance deal? If actively looking, did you find any tactics useful when finding the right owners to agree to this type of deal? How did the deal pan out?

I've scoured these forums quite a bit but haven't found something that answers this question fully yet.

Any helpful advice or lessons learned would be greatly appreciated! :)

John K. · Answer

I am always looking to try and get deals under seller financing, rather than outright purchases.

Most recently I have done 3 SFR deals on seller financing and one very large portfolio of 123 SFR, on seller financing.

The tactics I use always vary, because I try to identify pain points that I can make seller financing sound like a great solution to that problem. I remind them that selling on the market, will cost them at least 10%, versus 0% for my offer. I remind that my offer will exceed market value, after factoring in interest. If they are not cash motivated, it is very hard to argue with that logic.

If they come at me with concerns over payments being made in a timely manner, or at all.

My statement is as follows:

1. I am an investor, therefore my entire motivation is to make money. It would make zero sense for me to enter into this deal pay for a couple of months and then stop. The few months of free payments I would receive, would not help me achieve my goals. You would simply foreclose and I would lose everything.

The biggest hurdles for me, have always been just a lack of them understanding the process in general. I remind them that the transaction will be completed at a title company, thus having an unbiased 3rd party reviewing all documents, to ensure compliance with the laws of Texas. I have even told one couple to speak to an attorney of their choice, if they charge you, I'll reimburse you that fee.

Jeff Copeland · Answer

Not a "story" per se, but a good resource that walks you through the process: https://www.biggerpockets.com/member-blogs/6405/90747-the-dark-art-of-seller-financing-explained

John K. · Answer

@Gina DiMasi

You are most welcome.

I am old school when it comes to reaching out. I prefer the phone, 100% of the time. I feel these are the types of conversations that need a professional approach, from the very beginning.

The issue I have with letters/cards, is I don't have a lot of information that will help me during that conversation. I can't negotiate or even begin to get to that point, without some knowledge to help me find those pain points. It leaves me with 2 options. 1. Create an interrogation and keep asking questions, hoping they don't hang up or get tired of it. 2. Try to pay attention to them talking, while looking up data and undoubtedly getting caught doing it or worse, miss some very important information that they offered.

When I make a direct call, I have loads of data that I am staring at. I can take that conversation anywhere I feel it needs to go, to get that deal done.

Jason Dillard · Answer

We are actively looking for deals.  We have done every type of advertising you can think of.   The tactics we use is to simply ask questions and find out what the seller needs.  If you know all about the property, debt, and their situation, sometimes it makes sense for them to finance.   After you completely understand where they are and where they want to go, then ask questions that start with "Can you think of any reason why you wouldn't..........".   Then listen and ask more questions.  It takes knowledge of how to put and deal together for you to know what questions to ask.

Example:

Little house with retired couple that were on a fixed income asking 20k for a beat up rental.  Their  medical insurance just went up 200 a month.  They have a vacant house and no cash to make rent ready.

ARV  30k

Rent 450

Repairs 3k(to make rent ready)

Debt -Free and Clear

Question:  So you need another 200 a month?

Answer :  Yes

Question:  How much is the taxes and insurance you a paying each month now?

Answer:  100 a month

Question:  Can you think of any reason why you wouldn't let me cover the taxes and insurance and pay you 100 per month?

Answer:  No, what price.

Me:  Your price.  100 a month till its paid off.  Is there any reason why that won't work for you?

Answer:  No

Purchase was 20k with 0 down and 100 a month at 0%.  We had to repair to make rent ready(3k).Sold On Contract for 3k down and 450 a month.

Questions?

Gina DiMasi · Answer

@John K. Such a good point. Thank you so much!

Gina DiMasi · Answer

@John K. This is incredibly helpful, thank you for your insight! If you don't mind me asking, has one way or another worked best for you when trying to find these deals? For example, direct mail vs. calling people vs. emailing vs. ad campaigns?

Gina DiMasi · Answer

Thank you @Jeff Copeland for the article, great read and definitely found it helpful! Thank you @Jason Dillard for sharing what you're actively doing and a real-life example. What a great deal for both parties!

What's Your Seller Finance Story?

Most Popular Reply