Quote from @Alejandro Lozano:
Quote from @Kelby Schimming:
I like to refer to the rates on a Certificate of Deposit (CD).
Example:
If CDs are offering 4% interest, then your offer to the seller should be equal to or greater than 4%. If I was the one selling/financing the property, that would be my perspective. I'd need a reason to invest in you rather than a CD. For me, my reason would be "I'd rather make 5% on my money than 4%" However, every seller has their own perspective and different things that motivate them.
If ROI motivates them, I would share an illustration that simply shows them the benefits of seller financing rather than investing in a CD. I would highlight the pros of the installment sale and the higher return from seller financing.
Figure out what motivates them and use that as your basis.
Ok yes thank you for the advice I think im going to start off offering a little more that the what the cds are offering. I would also like to wholesale the seller finance deal. Can I lease option a seller finance deal? or I was also thinking wholesaling the contract to another investor with a downpayment of like $5K and a higher interest rate like a lease option.Thats what im working on trying to figure out right now. Thank you for getting back.
I think the person who the seller is doing business with is a huge factor in getting a seller to finance the property. That said, I think you may have trouble getting into an agreement with a seller because the seller has no idea who will be responsible for paying and taking care of the property.
The seller is going to want some comfort in the deal. Comfort in who they are doing business with and comfort from a sizeable down payment. For example, if you guys get the deal done with a 5k down payment and then 6 months later you or the other person forecloses, who's to say there is not more than 5k worth of damage done to the property. Now the seller has to come out of pocket to repair the damages and still has the property he thought he sold 6 months ago.
With only 5k down, I think that is a risky deal for the seller. To justify the risk, I would have to really trust you, or the interest rate would have to be very high.
Why wholesale the deal? If it's a good buy and there is value in the financing, why not just keep it for yourself and rent it out for at least a year? When the market gets hot again, sale the house and make your chunk of change then.
I am currently in midst of something similar. I got a seller financed deal May 2023 and was going to flip the property. However, once I realized I'd have to pay short term capital gains tax, I decided to keep it for at least a year and when the market is piping hot again, I'm going to sell it.
It sounds like you are getting some traction. Keep in mind you can put anything into the agreement so if he has some other concerns, put them in the agreement to give him that comfort.
