Seller Financing to start rental?

Question

I'm still learning so please correct me and give input if you have time, this is just an idea i have thought of. Say I dont have 10% down but want to start a rental asap can't rely on a bank at the moment. So just thinking.. say a landlord has a property that he would usually rent but is looking sell and offers seller financing. We write a contract, of course running the numbers that it would work as a rental for me. Basically its like he is renting it to me correct? But has a gaurunteed contract for 30yr or less or if I was to sell it I could pay him off. Would this work? I have good credit so running that wouldnt be a problem. Maybe this is a rent with the option to buy? Im sure there has to be some type of clause to protect the seller who offers seller financing.

sean

CJ L. · Answer

It's in Denver, Co and yeah the only reason they would do it just to get out and be done with it. The 10% definitely will make him think seriously about it and if all you can do is 5% offer that and see how it goes, let him think about it and tell him to call you in a few days with a decision.. just make sure it works for you as well as him.

Sean Gallagher · Answer

thats not a bad idea either with the 10%, gives more incentive for him to sell.. it'll eliminate closing cost too.  Personally I couldnt do 10%.. maybe 3-5 though as Im trying to do my first deal.

Sean Gallagher · Answer

CJ location please? : )

Sean Gallagher · Answer

thanks for the reply, you're saying if I was to take over the property a good approach for me would be to lease option it out correct?  That has to be what you meant.

I guess it would be tough, why would a landlord offer seller financing and take any less or just a tad more then what its renting.. Maybe he just wants to get rid of the property, like you said maybe he wants out..

CJ L. · Answer

I was wondering the same thing. I have a partner who's a landlord and wanted to get rid of one of his properties through seller financing and I was thinking of giving him 10% down and renting it out myself since it's in a great neighborhood. I'm just not sure on is how it all would work.

Bill Gulley · Answer

Your strategy is okay, it can be done, in reality, the landlord knows what it will rent for, getting it for a price and financing terms that allows you a profit will be the task.

The LL who wants out is a good one to look for, they carry it and have no maintenance worries, leasing problems and tax advantages, so use those angles to cut your deals. No money in...I'd suggest you simply lease with an option and be allowed to sub-let. Good luck....