New investor need help with seller financing.

[Bo Badalich]

I am a new investor in the minnesota market and plan to invest in sm multi family and student rentals. i haven't done a deal but I have spent the last six months listening to every BP podcast that I can (5-6 per day since i listen at work) and listening to any audiobooks they recommend. So I am plenty confident now to dive into investing. I am having issues getting pre-approved through a bank as I only have one year W2 job history and two years self employment history, even though I have 660 credit 10K saved and we'll make around 70 K this year all income combined. With that being said I've decided to look into seller financing. Do most sellers have a similar criteria they are looking for? are percentage rates relatively the same? And are there any major concerns I should concider so I don't screw myself over?

[John Woodrich]

Most sellers won't sell a property under seller financing or under a contract for deed so the first thing to look for is a property that you are able to purchase. 

Each seller will have their own criteria but your down payment will be the most assurance you aren't going to walk away from a deal.  A 660 credit score is OK, it isn't good.  That alone may be the reason you are having issues getting approved.  Not sure how you got your credit score but your online credit score isn't necessarily the same score the bank will see.  I was paying for Transunion at one point that said my score was around ~790 but when it was run through Transunion for WF it came back around ~745.  Low 600s or high 500s may be impossible to approve.  I would work on getting it up.

The only thing you should make sure is that you don't get bent over on your rate and that you will be able to make the payments.  There are forms of "illegal flipping" which involve selling a property on CD to someone with a large down payment and a poor ability to pay.  When they miss their first payment they void the contract and steal you down payment.

If you can't get financed that may be an indication that you can't afford it and should wait.  Sure it sucks paying rent but it would also suck to lose the money you have saved.