Help with Seller/Owner Financing Strategy

[Chris Frydenlund]

Hi,

Can someone help me remember the details?

A seasoned investor explained a great way to make money in real estate through seller financing (owner finance), but I can't remember the details, and now I have the opportunity to use this strategy.

Here's what I remember:

1. Buying a house for 70% of market value including repairs.

2. Purchase made with seller finance or with a hard money lender

3. If using hard money lender then refinance with bank after house is fixed, which will cover the money for hard money lender.

4. Seller finance to buyer for a higher interest rate than your own loan with previous owner or bank.

The benefit of this model is that you make money of the difference in the two loans. If you pay $500/month to previous owner through owner finance or to bank and collect $800/month from new buyer then you make $300/month without owning the title and don't have to worry about issues that a landlord has to deal with.

The Question Is...

Am I missing something? If you choose a hard money lender and pay back the lender with money from the bank can you owner finance it to the new buyer? Or does this only work if you buy the house from a seller that will seller finance it to you?

I hope you guys will help me clarify this strategy.