Should More House Flippers Be Seller Financing Their Deals?

by blogger1
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on Feb 22 in BestTransactionFunding

Is is smart for more house flippers to be seller financing their deals to retail buyers?

The latest figures from ATTOM Data Solutions’ house flipping report shows that flippers are down to a record low number of deals, only around 65% are using cash for their deals, and it is now taking over six months to turn the average flip. With this in mind, many house flippers could find offering seller financing on their resale properties helps a lot.

Rather than getting easier, there could be more difficult in obtaining home loans for end buyers ahead. Offering to hold the mortgage, do wrap around deals, or short term lease options could all help.

For a start, it can dramatically speed up the resale. Instead of sitting on the market for six month collecting dust, and going down in value in the perception of buyers, advertising seller financing could lead to a very fast resale deal.

Higher resale prices are another reason to consider this strategy. The types of buyers who are most likely to take these offers are not as price sensitive. They know there is a trade off in price versus terms. They are more worried about the ease of getting in, and the monthly payments.

In taking a seller held mortgage, investors are creating a new flexible paper asset. It can be held for ongoing passive income, sold quickly for cash, or a combination of both.

As a wholesaler you may be able to afford to do this if you are buying super cheap assets, say $4,000 to $40,0000. Or connect your flippers you are selling to with rehab lenders and private lenders who will give them a year to pay them off. The more you help your flipper clients, the more they can buy from you.

The owner financing concept can work well, IF sellers are providing attractive and competitive terms, and a trustworthy presentation. Many are not. They are asking for way too much in down payment, are not leaving enough spread in payments for a buyer to rent out the property, and are not squashing concerns about the seller being able to live up to their end of the deal. Keep these factors in mind.

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