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Should More House Flippers Be Seller Financing Their Deals?

by blogger1
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on Thursday, 22 February 2018
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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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When No Money Down Real Estate Gets Really Expensive

by blogger1
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on Monday, 22 April 2013
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If no money down real estate investing still really works in 2013 is it really possible that it could wind up less appealing than strategies?

There is no denying that no money down real estate works today between transactional funding and creative deal structuring, but can it actually end up being less profitable and more expensive than putting money down?

The promise of no down payment real estate deals has drawn thousands of new investors to the housing market year after year for decades, but while it has worked well for some, others have been caught off guard by ‘deals’ that weren’t really deals at all.

So what’s the main issue?

A lot of no down real estate investment education programs and gurus hone in on seller financing as a solution for those with no cash of their own to invest and poor credit.

Owner financed property might be a great idea for first time home buyers, those now purchasing a new residence after foreclosure and even some investors but it does come with its complexities and challenges for serious investors.

Seller financing is commonly offered by slick and amateur investors and desperate homeowners. Often they want above market prices in exchange, or demand terms and fine print that make properties much more expensive; shrinking profit margins and making them difficult to resell.

There can also be problems with transparency and seller ability to commit. Sometimes they aren’t actually able to sell on the terms they agreed to knowingly or not. This requires quality due diligence to ensure seller solvency, become aware of any additional liens and potential clouds on title.

All it takes is getting stuck with one dead weight deal you can’t get rid of to begin bringing down your house of cards.

All this can be avoided by sticking to wholesaling and using private, hard money or transactional funding.

This still offers all the advantages of leveraging other people’s money and the potential for zero down payment deals, but without the complexities, risks or digging into profit margins.

So line up your funding and you’ll be able to get out there and make a lot more offers, do a lot more volume and enjoy more income, bigger payday with less stress.
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