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Updated over 13 years ago,
Help me understand seller financing criteria
I think I understand the basics of seller financing methods. I know people use "subject-to" a lot but I believe that is one type of seller financing. But there is also lease option and I've heard Agreement for Sale or something similar.
I am interested in wholesaling these deals and wanted to clarify when seller financing is a good strategy.
An example of a deal as I understand it:
House worth 100k. Owner owes 90k at 6%, with payments of $600. Rents in area are $1000. Owner wants $2000 to leave.
I get the property under contract for $92k. I market it for 98k with 10k down. At closing, my buyer brings 10k. 2k of that goes to seller, approx 1k goes for closing, and 7k for me.
It seems to me, for something like this to work, there are a couple things that need to be in place. Please tell me if this is correct:
1. Seller has little to no equity but NOT upside down.
2. Home is in good condition.
3. Mortgage payment less than rental comps(unsure of exact formula)
Am I missing something with all of this?