Seller financing with BRRRR

[Paul Schmidt III]

After months of research and lurking I feel like the time is right for me to get into my first deal, so please bare with me. I have a lead on a property and have some questions on the best way to go about financing it. I have two options before me, the first is the classic BRRRR pay cash then refinance. The second is to offer seller financing allowing them to keep more of there money away from the tax man. Now if I would do seller financing I'm assuming they place a lean or a note on the property, if that is the case how does that work when I go to refinance and get my capital back out. Is there a benefit to one vs the other?

[David M.]

@Paul Schmidt III

I'm drawing blank on how seller financing "keeps more of their money away from the tax man..."

For seller financing, yes they should place a lien on the property.  When it comes time for you to refinance, its handled like any other refinance.........  When you close on your new loan, the proceeds during closing will payoff the balance of the Note owed to the "seller" and the lien should be discharged.

The benefit of seller financing is not having to get underwriting approval from a lender to get a loan.  Also, don't have the headache of actually getting the loan.  You could also potentially work out more advantageous terms on a seller financing.    You do realize that when YOU refinance, you are basically returning all the capital / loaned back back to your seller, right?  Depending on the saviness of the seller, they might realize that since you are basically getting a short term loan to help you finance your brrr.  That's all it is -- at least that's how I see if from your post.

Good luck.