Pitching seller financing for off market deals

Investor · Corona, CA · Member since 2015 · 23 posts · 4 votes

My wife and I live in a fairly high priced market in Southern California and our plan is to house-hack a fourplex in the next few months. We've recently been doing lots of research with regards to finding owners' names and contact information so we can cold call them to set up a meeting to discuss seller financing opportunities. Of course, we'd be looking for someone who is tired of the management, inherited the property or has some sort of issue or problem that disposing of the property would alleviate.

What are some of the most effective ways present this type of opportunity to owners (potential sellers) who are willing to meet with us? What are some good questions to ask to pique their interest enough to even meet with us?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

@Sean Walton would not mention the foreclosure this is sure to scare them to death.. LOL

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Patrick K.
Investor · San Luis Obispo, CA · Member since 2017 · 12 posts · 4 votes
9y
In my experience, elderly owners probably most receptive. They would probably prefer to have stable income rather than capital gain. Also, if they have had tenant issues or maintenance issues, then this would be more welcome. I don't mean to be stereo typical, and have seller financed from younger people.
The term of the loan can be important. Most seller financing can be amortized over 25-30 years but payable in 5-10. Or you can customize the amortization and term to the monthly income they need, within reason. We did one transaction where the seller needed to hit a certain monthly number and wouldn't budge. So we customized the term to meet there needs.
We have also thrown out there lower payments with annual balloons. This keeps our monthly nut down and gives us time to squirrel up the balloons throughout the year. even if you had to get some private money to make it happen, better to have a good deal than no deal.
It's hard in CA and very few of our deals we've gotten into have seller financing, so someone that owns the place free and clear helps because you can get in with a lower down payment. Or if they have a small note maybe that's okay.
Its a question we always ask, but sadly doesn't seem as prevalent as it was...
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
probably pretty tough assignment but can be done.. in a market where you simply list and sell for cash.. creating owner occ deals can be as stated pretty tough.
I suspect the deal will come together on your winning peronsality and the seller taking a personal liking to you and your family..
Just like when we get offers these days the agent representing the buyer will many times have pictures of the family and a little story and how the house is great for them etc etc...this is effective.
Like here in PDX they just say Hey my buyer is NOT from CA and is a local ...:)
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Sean Walton
Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
9y
Tell them it is the best way to reduce their tax burden and get the most money for their place. They also get passive income better than they have with tenants who don't pay on time and are always breaking things. And if you don't make payments they can foreclose on you and get the property back. If you are only doing seller finance you can pull a list from list source of 100% equity positions. If your list is to small you could maybe pull 80% to 90% and either pay off the remainder as your down payment to the seller. If your list is too big you can filter for only out of state landlords
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Sean Walton would not mention the foreclosure this is sure to scare them to death.. LOL
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Sean Walton
Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
9y
@Jay Hinrichs yeah probably better not to put the picture in their head but maybe mention their loan to you is secured by the property.
Another interesting strategy was mentioned in this thread doing a triple net lease with the owner. I had heard of it for big comercial tenants but not multi family in this context
http://www.biggerpockets.com/forums/311/topics/433519-need-help-with-strategy-buying-from-older-sellers
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Nick Mercurio
OP
Investor · Corona, CA · Member since 2015 · 23 posts · 4 votes
9y
Yes a good story sells, especially for the older people who love listening. Sean Walton how do you acquire these lists you're referring to?
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Sean Walton
Wholetailer & Architect · San Francisco, CA · Member since 2015 · 544 posts · 298 votes
9y
@Nick Mercurio I use listsource.com. The nice thing is you can see how many people are on a list based on your parameters before you buy the list so if you have a specific neighborhood you can draw a polygon around it and say give me all the multi-families with 90% equity with an assessed value of 1 million or less. Play around with different parameter. You probably also want to filter out trusts (trusts indicate a more sophisticated investor not a mom and pop) and duplicates you don't want to mail the same person multiple times. It is usually $0.29 per lead. If you are planning to outsource you mailers yellowletters can buy your list for $0.15 per lead.
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Nick Mercurio
OP
Investor · Corona, CA · Member since 2015 · 23 posts · 4 votes
9y
Nice thanks. I'll have to look into that.
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