All Forum Posts by: Nathaniel K.

@David M. This makes a lot more sense. I see all these people talking about putting such low down payments using seller financing which makes sense as to how they are able to scale to so many properties in their portfolio. But from my understanding at the end you’d be pulling out a conventional loan anyways so maybe it’s just better to go the conventional loan to begin?

@Steve K. In this case it sounds like it may be better to just go the route of conventional loan ? In the view of scaling my portfolio would it then make sense to refinance my conventional loan to then use that money for a new down payment of another rental?

Hi everyone, 

As I get closer to purchasing my first rental property, I notice that I may have the opportunity to take on a seller financed deal. However, my confusion comes as to how this seller will be paid back at the end. I understand that in terms of leveraging I can have a lower down payment amount which is beneficial for me, and as the months go buy I will be paying the seller "mortgage + interest" though its not really mortgage. I understand seller financed deals last about 5 years on average, so after 5 years how do I pay this seller back? Is it this time where I go and pull a conventional loan? Do I do a refinance? I dont understand how this will work. I am looking to getting into Section 8 rentals in Ohio with properties under 100K, sure there is room for forced appreciation but I can't see it being more than 20-30k which is certainly not enough to pay back the seller for the full amount. Excuse my ignorance, just trying to navigate the financing side of things as  this is where the success in leveraging really lies. 

Best, 

Nathan

 Happy to hear it went great for you! I always say it's one thing reading and doing the homework, and it's a whole other thing actually going out there and getting your hands "dirty." Thats the mindset I'm going with and I am sure without a doubt I will learn so much that I didn't know before. Right now I am in the process of getting a team in place while constantly analyzing the numbers on properties. 

@Brad Mack

Hey Brad,

I would absolutely love to connect and learn more about the Georgia areas you invest in!

 I appreciate your post, Dan. I certainly agree with you in new investors underestimating expenses and overestimating rents. In analyzing and running numbers for properties I do the opposite to help give me a more accurate range. I often overestimate expenses and underestimate rents to see if the numbers are still favorable in those terms. This helps me better have an understanding on which properties have the most potentials. 

I also agree that seller financing is challenging and rare to find, and even then might come with their own set of challenges. I am doing my best at the moment to learn more about seller financing and the opportunities it can bring. 

@Ian Walsh Trust me, purchasing in my area would have been the most ideal, however being in Los Angeles, it makes it almost impossible for deals to make sense for a new investor with such a high barrier to entry. Only strategy I see working in my area is the BRRRR strategy and even then high costs and high interest rates are not ideal at the moment for me. I will certainly work my way up to such strategy here in the future though.

@Brad Gibson

I appreciate the advice Brad! Thank you very much for your insight.

 I 1000% agree with you on that. It certainly will be a slow growth, I would like to ensure scalability. Not saying going slow is a bad things, but getting 1 property at a time at 20k+ down each time will take decades to build a nice portfolio. Creative financing will be my best bet, just finding those deals will take some work I am willing to take on. 

 That's awesome! Very impressive. I have been analyzing numbers on properties in Cleveland, Akron and Toledo for a couple of hours each night. First thing on my list is to find an investor-friendly like minded agent and second will be to find a partner-minded property manager. Would love to connect and hear if if you have any referrals from your experience! Congrats again and cheers!