The great thing about owner financing is that you get to create the terms. That means you can introduce all sort of creativity into your offers.
On the one hand, you can get into the habit of making seller financed offers every time you make an offer. When you make these offers consistently, some of these offers will be accepted.
Some of my seller financed offers are the best deals I’ve made. For example, I’ll almost always set up these offers so that I don’t pay any interest. You can get much better cash flow and pay off those loans much, much faster when you don’t pay any interest.
On the other hand, you can be one dimensional and only make all-cash offers. You’ll miss out on some sweet owner finance deals you would have gotten if you’d made those offers.
Here are two terms you always want to ask for in your seller financed offers. After all, if you’re going to make a deal, why not make it one heck of an offer for you?
When you have a free and clear house, always make a “zero interest” offer. Make it a no-money down and the seller’s full asking price. Yes, their full asking price. But aren’t you supposed to get a great deal on real estate? Doesn’t that mean a low price?
Sometime, paying a higher price is a better deal if the terms are right.
I usually make these offers over a term of 100 payments. For example, if they are asking $50,000 for the property, make an offer of $500 per month for 100 months.
100 months is 8 years and 3 months. If you can have a house free and clear in under 10 years, that’s a good thing, right? You’re darn right!
These are the houses you definitely want to hold onto.
Imagine having several houses that are all paying off in less than 9 years.
Now, you might think that no one in their right mind would make this type of deal. Perhaps you’re right. I guess I buy a lot of houses from crazy people.
I’m always surprised at how few people object to me not paying interest on these loans.
So get busy and make some offers using these types of terms.
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July 26th, 2010 at 9:42 am
Do you usually shoot for 8 or 9 years? Have you done any with 30yr financing?