Best way to learn about owner financing

Best way to learn about owner financing

Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes

I'll be closing on my 4th rental property next week and would like to keep purchasing other properties (buy & hold is my strategy). However, in order to do so, I'll need to come up with some alternate forms of financing. So far, I've been using either cash or conventional mortgages for the purchases, but I'm slowly running out of money and most traditional banks I've dealt with have rules/overlays that prevent them from doing new loans when you already have four in place.

All of my present rentals are SF houses, but I'm considering getting into multi-family (i.e. small apartment complex). Even if I do, I'd probably still do SF.

Since I don't "flip" the houses and my investments are more long-term oriented, I don't think short-term hard money loans are the way to go (unless, of course, I can acquire a good value-add MF property with a solid exit strategy - like maybe a refi after rehabbing).

So I'd like to start looking into other purchasing options, like owner financing (i.e. subject to, land trusts, etc etc etc). However, I don't really know anything about these types of purchases. I've browsed through some of the older posts on here regarding this subject, and think I now have a BASIC understanding of the process. But I'm really looking for more info on the details/specifics, like exactly how to structure the deal, suggested financing terms, what documents/forms to use, etc.

Can anyone recommend a book (I'm really into reading) or a step-by-step course on how to learn to do these types of deals?

Any information would be greatly appreciated. Thanks!

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  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    I suggest your search for "Real Estate 101" that I wrote a few years ago, it will take you through the steps of seller financing and the issues for due diligence, but now there are other issues as well, the SAFE Act and upcomming issues with the CFPB, which is still up in the air. But the RE 101 will get you started......good lcuk

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    Bill- I will try to find your article. I'm not familiar with what the upcoming issues with CFPB are or how they might affect what I'm looking into, but isn't the SAFE Act focused on mortgage ORIGINATORS?

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    The SAFE Act is a large document and about 3/4ths of the way there are several paragraphs concerning dealers and seller financing, of residential property, basically that if sales are done as a business or non-owner occupied that a mortgage originator license is required or an MO to be used.

    The CFPB consumer financial protection board is a newly established agency that will have oversight of all consumer financing to include installment sales in real estate. We have no idea yet what limitations, if any, they might make or how they will be enforcing current law.

    Good luck....

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Kyle J. you'll find alot of info here on the subject, you're welcome to contact me as well if you have a specific question that isn't forum worthy in your mind......

    Seller financing is not the same as a cash loan, it comes from an eqity amount based on a sale price, so there are differences....

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    Bill - Thanks for your responses.

    Jewel - Thank you for your lengthy response as well, though honestly I could not understand what you were trying to say. You recommend I focus on "credit repair", but my credit is excellent (right around 800 score) so I don't really think that's applicable or something I need to be overly concerned with.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    In reading other posts, I see a few people have mentioned William Tingle. Never heard of him before but I checked out his website and he sells a book called "The Ultimate Sub2 Guidebook". It sounds pretty comprehensive and right on point for what I'm trying to learn about. Anyone have any experience with this guy or his book?

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    I'd also suggest you learn conventional lending, you'll be working with it, may need to dfend your deal under it and your ultimate goal is meeting those guidelines, you can't address fully any seller financing methods without a good understanding of the conventional side. Think about it....

  • Real Estate Investor · Fort Washington, MD · Member since 2012 · 16 posts · 1 vote
    14y

    HI Bill, i'm also interested in learning about this topic too. I'm trying to acquire using seller financing so any help would be great. Can you tell me how to get to your article and also where I should start on learning about conventional lending

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    You can PM me as it's in my e-mail, just pm me here.

    Seller financing of multi housing shouldn't be a problem as the SAFE Act and other issues deal with 1-4 single family dwellings.

    The basics are the same regardless of the type of property but the scope of the project will determine additional due diligence and securitization issues of private property that may be included, such as a laundry facility, pool equipment, club house furniture and fixtures, etc.

    The seller may want an offset provision for rents on the note which would be common as well. That allows the lender to collect rents in the event of default.

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