All Forum Posts by: Jordan Alexander

 Thank you Shiela! I appreciate it!

Hi everyone,

I follow Pace Morby and a couple of other creative finance masters on social media. When it comes to creative finance, I personally lean more towards seller finance as I like getting to work with owners and building relationships with them. I'm not opposed to subject to, but my fear is whoever I am taking over the existing mortgage from will not continue making the payments. How do you mitigate this risk? Is it just as simple as entering your account information in their mortgage payment portal and making sure the payment comes from your account? Thoughts?

Thank you!

 Marcus there are two main ways seller financed deals can be structured. The first (and I think the better of the two) is just doing a simple of ownership from the seller to the buy. The title company will conduct a title search to make sure the title is clean and that the seller can actually finance the deal. The main documents you will need are a warranty deed, promissory note, and then a mortgage or deed of trust (depending on what your state uses. You now own the property, you are on the title, the seller is off the title, and the mortgage or deed of trust represents they have a lien on the property. In a land contract or contract for deed, the seller remains on the title and they are not taken off of the title until the property is paid off or when you refinance and cash them out. The buyer does get equitable title and they do build equity in the property. In a land contract, you as the buyer do not receive the deed until you make the final loan payment. I hope this helps!

I've done a lot of research on seller financing as that is the #1 strategy I am looking to incorporate in my investing career. Seller financing is all about the seller, not about the property! You need to understand their goals are ultimately create a win-win situation for everyone. You need to ask yourself, "How do I buy it? How do I never lose it?" Buying a property comes down to deal, debt, and equity (the deal always comes first). Never losing a property comes down to long term, fixed-rate debt with positive cashflow. The purchase price is the least important term when it comes to seller financing. Do you have the 20% down payment? If you do, great! If not, see if you can negotiate and bring down the down payment. The term length is perfect as it long term debt. As far as interest rate, I personally think that is very high since you can get a lower rate with banks, but does the property cashflow? And is it a cashflowing number you like and that you can grow from? Then, go for it! Ultimately, it's all about creating a win-win situation as I mentioned earlier and if the terms they gave you does not allow you to win, then you should show them why and negotiate.

A promissory note along with a mortgage (or deed of trust) are the two biggest documents you will want to secure. Also, make sure your name is on the deed and you are actually the owner of the property, known as a warranty deed. With a land contract, the seller still controls ownership of the property.

Assuming you do not have any consumer debt, I would purchase as much rental properties as I could utilizing The Stack method with the $200k!

Happy New Year Everyone!

In 2023, the strategy I would like to execute the most is seller/owner financing. I would also like to transfer future properties into land trusts for anonymity purposes. That being said, should I let the seller know I plan to transfer a property into a land trust once I have the Deed in my name? If so, should this be just a simple verbal conversation or should I have an attorney include a paragraph somewhere in the contract stating I would like to do this? 

Thank you,

Jordan

Hi Sanjeev,

Unfortunately, you will not be able to do what you are trying to. When executing a 1031 exchange, the purpose is to upgrade to an asset that is similar to the asset you are selling. In other words, if you want to sell your multifamily property and defer capital gains tax, then you must purchase another multifamily property. They call this a like-kind exchange. Below is a link that explains it better:

https://www.investopedia.com/f...

Hope this helps!

Jordan

Thank you for the advice Benjamin!

Thank you Olia! I appreciate your help! I'll be sure to bring this up to an attorney in my area.