1st seller financing deal - mistake was made - lesson was learned - still came out above water

[Huy N.]

I will summarize my experience of my 1st financing deal here! if you are interested in the detail, you can visit this post

This deal was meant to be a quick flip, and guess what.. it didn't work out for various reason and i am glad i have a plan B: Seller financing

Just like the 1st flip. I purchased this property from a wholesaler. I made the same mistake that i made on the 1st flip again unfortunately. I underestimated the rehab from the beginning and instead of 20k like i expected. it turned out to be 34k. The reason for this is i did not have experience estimating the outside job of the house. I also over-rehabbed by putting in granite throughout the house and installed premium carpet, etc... I thought it could sell for more and quicker but it didn't. Lesson learned again!! Dont over rehab in B- or below area. You won't get much return out of it

On a high level view, the number is below:

Deposit	-5000
HUD Purchase price	-71945.54
rehab	-34655.03
selling cost	-5000
Final Price	-116600.57
selling price	125000
Potential Profit	8399.43

As you can see. the number is very tight. On top of that. this is a B- area and I could not find any well qualified buyers. It sat on the market for a few days, I had an offer with FHA but then the buyers backed out. very few "traditional" traffic.

HOWEVER, my phone is loaded with voice mail and question regarding seller financing option. I quickly realized that this is the opportunity that could get me out of this deal. I quickly researched about seller financing, I went to networking event seeking advice from the expert and was able to connect with an awesome loan servicing company. For a small fee, he was able to help me service the loan and escrow the tax, which was my biggest concern.

I then simply picked the best offer i have on the table. The buyers were willing to put $50,000 down with a 9% interest in 10 years. $50,000 pretty much covered my risk, and i am confident going in as this is my 1st deal.

Going through escrow and get to the closing table on this deal was the hardest experience i ever encountered. i had to wear 3 hat: Listing Agent, Seller, and lender. It drove me nut. Wearing 3 hat made me lost the focus on the crucial job as the listing agent and let the buyer agent beat me up left and right the contract and term that is favorable to his buyers. 

One day before closing, we found out that the previous title company forgot to pay off a 10000$ tax bill while still delivering me the clear title! This created so much confusion and pressure from all parties. But i am glad that everybody was able to calm down and work together to sort thing out. 

Anyway. the deal closed and and if the buyers keep making his payment on time and don't pay me back early. After 10 year, i will received a total interest of $39000 plus my loan amount of $75000 back. I don't think it is a bad deal after all right? I'm not sure what is the tax benefit of seller financing. I guess i will find that out soon.

What is your 1st seller financing deal look like? Was it like a piece of cake, or did it drive you crazy like my 1st deal? I would love to hear your stories!