Seller Financing OR Option to Purchase- HELP!

[Account Closed]

Hi Everyone,

I'm not an expert on creative financing deals, so I'm reaching out to those who are.

I have a seller who is older, does not want to deal with kicking out his tenant, fixing up and selling his condo. (The perfect scenario for my typical all cash offers, as long as we can agree on price.) He also doesn't need the money immediately. At first I offered my typical low, all cash offer. He wants a little more, and I cant make money off it at the price he wants (since its not my cash, I am using hard money.)

So I asked if he would consider carrying the loan for me and that I might be able to pay more as long as theres no interest. Basically like a partnership. He lets me fix up his condo, list it and sell it, and I get whatever we agree upon now. I think this is called an Option, or is it seller financing with 0 interest?

So how do people make deals like this work? What kind of documents/contracts would I use? Should I even do it? I go to REI club meetings where they talk about seller financing all the time, but I have no clue how to move forward. And how do I protect myself from the seller going out from under me and selling the property after I spent money rehabbing the place??

Thank you to anyone who can help guide me a little!

[Account Closed]

Originally posted by @Account Closed:

Hi Everyone,

I'm not an expert on creative financing deals, so I'm reaching out to those who are.

I have a seller who is older, does not want to deal with kicking out his tenant, fixing up and selling his condo. (The perfect scenario for my typical all cash offers, as long as we can agree on price.) He also doesn't need the money immediately. At first I offered my typical low, all cash offer. He wants a little more, and I cant make money off it at the price he wants (since its not my cash, I am using hard money.)

So I asked if he would consider carrying the loan for me and that I might be able to pay more as long as theres no interest. Basically like a partnership. He lets me fix up his condo, list it and sell it, and I get whatever we agree upon now. I think this is called an Option, or is it seller financing with 0 interest?

So how do people make deals like this work? What kind of documents/contracts would I use? Should I even do it? I go to REI club meetings where they talk about seller financing all the time, but I have no clue how to move forward. And how do I protect myself from the seller going out from under me and selling the property after I spent money rehabbing the place??

Thank you to anyone who can help guide me a little!

You buy the property for the agreed upon price. He carries back a promissory note secured by a deed of trust. You use your money or private money to rehab and carry the property (taxes, insurance, HOA, utilities, loan costs). You the list it and resell. When you resell, escrow pays off the loan. It's just like any other rehab deal, except the seller is the lender.

There are a ton of other ways to do it, but IMO this is the cleanest. You own all the equity and any profit you create. But you also have to find the money for the rehab and take all the risk if it doesn't sell.