Seller financing with no money down

[Jeffrey De Los Santos]

I am very interested in learning about seller financing, as I have heard of a few people acquiring property with this strategy.

What really surprises me is how some people can structure these deals, putting down any of their own money. Can this actually be done?

If anyone has pulled this off and knows how to structure a deal like this and what kind of terms or negotiation is done with the seller to convince them to sell the property with no skin in the game, I would appreciate any of your input. Thanks...

[Matt Nico]

Originally posted by @Jeffrey De Los Santos:

I am very interested in learning about seller financing, as I have heard of a few people acquiring property with this strategy.

What really surprises me is how some people can structure these deals, putting down any of their own money. Can this actually be done?

If anyone has pulled this off and knows how to structure a deal like this and what kind of terms or negotiation is done with the seller to convince them to sell the property with no skin in the game, I would appreciate any of your input. Thanks...

 

@Jeffrey De Los Santos

Its super fun to put together a seller finance deal because you can make any terms you want really.

Here are some answers and tips for you:

Yes it can be done with no money (and low money) down, but I think these are fairly rare. I just bought a house on Thursday using seller financing, and he wanted a $5,000 down payment on a $262,000 purchase price. That's just under a 2% down payment for reference. I would consider a <2% down payment as "No money".

To tell you how I pulled this off, you have to understand that if you put such a small down payment down, usually it comes at a tradeoff. In my particular scenario, the seller asked for a high interest rate. For me, when I ran my numbers with the high interest rate, the deal still worked, so we were both happy.

Here is my deal specifically. I wrote a post last week about it if your interested. Its labeled "Post#1, seller financing in COVID-19 Market." I also have rehab pictures.

Purchase price: $262,000 with $5,000 down. So $257,000 of the money is the note.

Term: 18 months of interest only payments.

Interest starts at 6.5% for the first 4 months, and goes up gradually from month 5-month 9, where it caps at 10%.

I have contacted lenders already, who have given me a conditional pre-approval to re-finance out of the sellers deal after 6 months of seasoning. So I have 6 months to rehab the property (it will be done in 1 and a half), rent it out, and then I can refinance into a lower interest rate at a 30 year fixed. So In the end, I will probably never see the 10% interest rate. Its just a safety on my end.

I hope this deal gives you an idea of the creativity you can have with seller financing deals. If you have anymore questions, shoot me a PM.

Happy housing,

-Matt