Seller Financing & Lease Options
The Deal Is In The Terms
The next Deal Section we're going to cover is "Seller Financing".
In Deal Section 3, "Seller Financing", the deal is in the finance terms.
This is unlike in Deal Section 1 (Wholesaling), and Deal Section 2 (Retailing), where the deal is in getting a low price.
It is important to understand that you don't always have to get a good price on a property for it to be a deal.
The primary focus of this Section is the terms under which you can buy a property and not necessarily the price.
Therefore, you don't have to steal a house real cheap for it to be a deal.
Buy 100% Financed Properties and Still Make Money
In this Section, you can even make money on houses that have little or even no equity, which means that you can buy properties that are 100% financed. You can even buy nice houses in nice areas that don't need work, all by using little or no money and no credit.
Creating No Qualify Financing
There are two things you can do with a property, you can either sell the property or keep it.
This is important to keep in mind when working in this Section.
Therefore, the objective in this Section is to either
- create no qualify financing for yourself or
- create no qualify financing you can pass on to your buyer.
It is important to point out that every strategy in the Seller Financing Section does require you to negotiate one-on-one with sellers.
This is unlike the Wholesale and Retail Sections where you can make offers through real estate agents.
So, if you are a little shy, you'll have to grin and bear it.
Buying Your Own Home Without Qualifying
If you are looking to buy a home to live in by putting no money down and without using your credit, the Seller Financing Section is the Deal Section you should be paying special attention to.
It is not too hard to find sellers who are looking to get out from underneath the monthly payments of their home.
Some sellers will outright deed you their house if you will start making their mortgage payments for them.
- Other sellers may take a more conservative approach and lease their property to you with an option to buy.
How long it will take you to find a home for yourself really depends on how choosy you are about the homes you find.
- You will come across houses that just don't meet your needs or tastes, so don't just jump into the first house that you find, just because you feel that you have to own a home.
- You can take your time and make sure you get the right home for you at the price and terms you can afford.
- You can even buy a nice home that doesn't need repairs, that's in a nice area.
Creating No Qualify Financing You Can Pass On To Your Buyers
The other exit strategy you can do is to create no qualify financing you can pass on to your buyer as if you were the bank.
- It is very easy to sell a nice house in a nice area for top dollar when your buyer does not have to go down and qualify for a bank loan.
- Also, the number of potential buyers who can purchase the property from you increases enormously because of the fact they don't have to qualify.
Types Of Seller Financing
There are several types of creative financing techniques that are covered in this Section. They are,
- "Subject To",
- "Seller Held Mortgages",
- "Agreement For Deeds",
- "Lease Options", and
- "Straight Options"
Some seller financing techniques give you as the buyer more control over the property than others.
- Logically, the techniques that give you more control require the seller to be more motivated or flexible.
- Therefore, you must understand how each technique gives you more control and to what level the seller must flex.
Why Sellers Will Give Seller Financing?
There are many reasons why a seller would consider doing some form of seller financing.
- However, the main deciding factor is that the seller wants debt relief.
- For some reason, the seller finds him or herself owning a house that they no longer feel they can make the payments on.
- The prospect of someone taking over the property and relieving them of the monthly payments can be appealing.
Some of the reasons why a seller would consider a form of seller financing include
- a job transfer (especially people in the military), or
- they could have lost their job all together.
- The owner could also be facing foreclosure or
- be getting a divorce.
- In fact, the list of reasons and circumstances is practically endless as to why the seller can no longer afford the house.
Your objective is to give
the seller of that house a solution and that is they will no longer
have to worry about the monthly payments or maintaining the house.
Giving The Seller Debt Relief
Your job is to give the seller the debt relief they need. Therefore, your objective is to take over the monthly payment in some way or another.
- This may be by making the seller a lease payment under a Lease Option agreement or
- the seller may be so motivated that they deed you the house and let you begin making the payments to bank on their loan.
It is possible to pay the seller more than what is owed monthly on their mortgage payment but realize, if the seller is looking to make a profit, they most likely are not motivated enough.
- Debt relief should be more important to the seller than getting the best deal they can on their house. What it will ultimately come down to though is whether or not the deal works for you as the buyer.
