Owner Financing how it works

[Andrew Rivera]

I'm graduating college at the end of this month and am interested in getting Into REI starting off with a duplex. I have a job lined up for when I'm done with college and am trying to use the owner finance method to get my first property. I'm curious about how I would present that to the seller? Would I use a real estate agent or do it my self? Secondly from all the reading and podcast I've listened to with owner finance I wouldn't have to pay mortgage insurance just the Mortgage(principal with Interest) and the property taxes correct?

I appreciate the insight and guidance from everyone who has been doing this for a while.

Thank you

Andrew Rivera

[Spencer Cornelia]

@Andrew Rivera I would highly recommend not using a real estate agent when searching for seller financing.

MLS properties have the pro that the owner is obviously wanting to sell in that moment. The con is that they are typically selling to receive the equity in their house in cash and can move on to whatever they're moving on to.

I'd recommend going off-market to look for a property that you can purchase using seller financing.  My first deal was a 4plex purchased off-market using seller financing.

Seller financing is a win-win scenario IMO.  You are a willing buyer TODAY which means their days on market is negative.  They haven't even listed the property and they have a buyer.  It's a win for you because you can get creative with the financing and don't have to play by the banks' rules.

If you are able to convey the value of seller financing to the owner, then you will have a better chance at having them sign on the dotted line for some sort of creative finance.  The benefits that you should convey to them is that they will save 6% of the purchase price in agent fees because agents will not be involved.  On a $300k purchase, you saved them $18k.  They also can save money on capital gains since they won't be making their entire equity chunk in one day.  And, if the worst thing happens which is you not paying, then they keep your money + the mortgage paydown you've been making and take back the property.

So what are your options....

If the owner does not have a mortgage, then simple!  You just set the terms on what you'd like.

If the owner still has a mortgage, then ask for a lease purchase, lease option, or wraparound mortgage.  I'd recommend spending your weekend studying these three forms of seller financing as one of these three will likely be your best option.