![]() ![]() no debt or a relatively small debt that can be paid off at closing) A seller has equity in the property (i.e.But for the purposes of everything I’ll explain in this article, here’s what I mean: There are actually different variations on the idea of seller financing. Instead of getting the entire price in cash at closing, the seller carries back part or all of the price using some sort of contract (more on that in the section on Owner Financing Contracts). So at its most basic, seller financing just means the seller of real estate waits to get all of his or her sales price. Instead, the buyer usually makes a down payment and then the seller receives the rest of the purchase price in installments over time (aka an installment sale). You can think of it as a loan, although no money actually changes hand between the buyer and seller. The definition of seller financing is a transaction where the seller extends credit to the buyer. So, in the rest of the article I’ll help you expand your toolbox with one particularly powerful tool – seller financing. Let’s start with the basics of what seller financing is. But you may miss out on many opportunities that could have been unlocked with more financing knowledge and skills. And eventually you may hit a wall of frustration and perhaps a bruised ego as your growth slows. Only using “hammer” investing might allow you to drive a few nails and even force in a few screws. This is basically like hitting every object (i.e. Yet, real estate investors try to use only 1 or 2 of the financing types above (usually conventional financing). It would be ridiculous for a carpenter to try to use a hammer to cut a board or turn a screw. Lease options – has similarities to seller financing but the seller retains the property title (see my YouTube lease option video).Hard money financing – also private financing but usually from a group or business that loans the money of others.Private financing – from an individual or an individuals’ self-directed IRA.Commercial financing – business loans usually from a local bank or other commercial lender.FHA/VA/USDA loan programs – only for owner-occupied financing, like with a house hack.Conventional financing – typically 15 or 30-year loans, often conforming to Fannie Mae/Freddie Mac standards.But the other tools in your real estate financing toolbox include: Seller financing is one of the better tools available to you. And the more tools you have and know how to use, the better real estate investor you will be. The different types of real estate financing are just tools in a toolbox. ![]() To turn a screw, he uses a screw driver.Īnd so it is with real estate financing. When a master carpenter builds a house, he uses different tools for different situations. I’ll start by explaining how seller financing fits in with your overall toolbox of real estate financing strategies. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |