owner financing wholesaling?

Question

Hi biggerpockets. I had a question and was hoping someone here could give me some advice. Can you wholesale owner finance homes? And does this work on FSBO high end homes that are in no need of repair.

Jay Hinrichs · Answer

@Will Barnard I think this falls down when the seller thinks wholesaler is buyer then does the old switch aroo... plus not sure how many wholeslaers are going to put up their credit and financials for review and approval.. such as what any prudent seller in that price point would do.I know when I first came to Oregon I offered on two homes just under 1 mil each and wanted some seller carry as I had a home in Canada that I had to wait to get my money back from REV CA.. ONe seller wanted a full audited financial statement .. the other ( house I finally bought was good with a POF of cash in bank and normal credit.)... I suppose this is where this would get tough in the higher end homes with what would be generally a more sophisticated seller .. than a seller on a 100k home that is prevalent. in these carry back deals. if any of that makes sense :)

Will Barnard · Answer

Why would anyone sell a property not needing any work for a $100k discount or why would a buyer buy at $100k more than the market value?Is all of this hypothetical or do you have a real specific deal in mind?As to wholesaling an owner carried financed deal, I don't recommend it and most sellers (unless they are completely naive or taken advantage of) would not ever agree to accept a contract where you could assign the loan to any other party they never met, never checked credit on, etc. When I structure an owner financed deal, the seller is trusting me to make good on the payments and I am not betraying that trust or trusting somewhere else to not betray it, I keep the deal myself.Lastly, most people these days appear to be wholesaling illegally and adding into the mix owner financing only adds to the potential problems.

Jeff Filali · Answer

Account Closed This would also depend on your contract. Some contracts for seller financing will include NOT ASSIGNABLE and/or DUE ON SALE clauses. Otherwise its kind of like doing a "subject to" on a seller finance mortgage.

Andrew Postell · Answer

Account Closed now that is another question entirely. Most wholesalers just make money on the spread of the sale - you have contract for $100k, you sell contract for $110k, you make $10k. that formula means you never are on title, you never own anything, you don't have closing costs, etc. You just get a finders fee. What you described above would be possible and some people do use that strategy. What it means is that you buy the home, you pay all the closing, costs, title, filing fees, down payment, etc. Someone else comes and buys the home from you and you provide a wrap, owner's financed, mortgage on top. This means more steps and more risk of course but it is possible to do this.

Andrew Postell · Answer

Account Closed as long as the home is for sale you can wholesale any type of home. Most of the time the buyer will provide their own financing but hearing an owner financing option wouldn't hurt. You can certainly wholesale both types of properties you described above.

Account Closed · Answer

Thank you Rick I appreciate it, I will get right on that! Happy Investing to you as well! @Rick Pozos

Account Closed · Answer

Okay thank you very much for your input. But im sure the end result is worth it. @Rick Pozos

Account Closed · Answer

Let me rephrase that. I would find a buyer before closing. If we closed in 30 days or 45 days whatever me and the seller agreed to then that would be the time for me to find a buyer. @Rick Stein

Account Closed · Answer

Yes the market would be smaller for buyers but there still would be some buyers who would interested in purchasing a seller financed house that's worth that much. Is buying with terms and selling with terms a good investment strategy or is it more complicated? @Rick PozosAnd to be clear @Jay Hinrichs the seller would full aware of the situation I would never doing anything shady to a seller. I would make sure I would have a qualified buyer.

Account Closed · Answer

No it was just an example. I was just seeing what some experienced investors would say. I just wanted to see if it possible do do seller financed deals on more higher end homes that really didn't need work done to them and sellers would agree to owner financing. @Will Barnard. I appreciate your response i read about you in "the book on no and low money down" by Brandon.