Just came across your content, it amazes me how you don’t put money down. I’m over here trying to save up $40k to put down 20% down for a rental property that I will like to purchase this year if possible. I’m currently informing myself through RUclips. I have not graduated from RUclips yet 😂 … will keep on watching your content and see what happens.
I was listening to Biggerpockets and this other groups and all I hear is for your second property is 20% down so that’s where I get my 40k number from…
YT University is riddled with ignorant and deceptive and greedy "teachers/professors", just like this guy pace. Stop being the textbook naive viewer. Pace is the textbook lazy man and selfish greedy slippery salesman. The F150 Story is a age old Sales Mantra of "Facts Tell, Stories SELL"
@@PaceMorby nah bro, you gotta own this one..Susan got had, if Susan exist at all 😂 Why would she sell to you only to wait weeks/months for you to collect 4-5x more than what your paying her? At that point I’d imagine she’d list it on Airbnb herself. But your video was very well edited 💯
@@justadrumPoint is she wants to sell. She wants to sell and travel, nobody is biting on her $110k price, he (in exchange for 6 months grace period, her paying closing fees, and the ability to make payments) buys her property for her asking price + $10,000. She charged him $10k for accepting payments, no problem because he actually isn’t “paying” anything, the rental income covers the payments and then some. Everybody wins!
Yeah. Susan didn't understand the time value of money. At $375 a month, she'll finally break even in around 20 years, assuming she lives that long if she's elderly and retired. Plus, with inflation, that $375 will feel like $230 in 20 years. She could have put that $60k into a high dividend yield savings account and earn or put it into a monthly paying dividend stock and earn that $375 a month in dividend payments while keeping her 60K principle.
K. So my two questions are: 1. I'm guessing the collateral you would give in this agreement would be the house? So if you don't make payments they could take back the house? Is there any other way to make them feel comfortable that they are guaranteed their money each month and won't be chasing after you just as much as if they had kept the place with a tenant? Cuz in alot of ways you're just being a glorified tenant. So what makes it more of a sure fire thing with you? 2. Does this only work if they have. I mortgage? How would this work if they do? Don't they need to pay off the mortgage on sale? If they don't, then wouldn't Subject to have to happen, and then any additional amount they want over the mortgage could be seller financed? Is there a way to get around the mortgage entirely to do this? 3. How should you play this if the owner has a mortgage higher than the asking price and they're already willing to take a loss? Would subject to and seller finance be totally off the table?
4. What happens if you want to sell the property after buying on seller financing? Can Jose sell his F150 before paying it off? Can you sell the home before paying it off? I don't think we'll ever get answers here lol
Yes they have to already have the property paid for in full to do seller financing. If they have a mortgage you can do a sandwich lease option. This means you'd rent to own the property with permission to sublease. You'd then find a retail buyer who plans on living in the home and set up different terms with them that would allow you to make money on the down payment, cash flow every month, and make some money after the sale is completed. These are typically 3-5 year lease options.
Pace, could you say how often you get a seller willing to do principle only payments at such low prices? It just sounds too good to be true. And the F150 story only works if she doesn't catch on that the guy actually paid 3 times your blue book price. Shouldn't she, by the same logic, ask you for 3x her house around 300k? You paid 110k for a home that, by the time it's paid for, will have probably appreciated to be worth double that price.
She can ask for 3 times but if the only person willing to pay what you want is at your number and it’s not worth your number do you take the loss and sit on it and keep getting low balled and never get a good sale even close to wat u want or do u raise it and never sell it just because it’s a contract for 10 years don’t mean it will take that long to pay in full if you need to sell it u get rid of the property
She gets the 10k down payment plus a monthly payment also from month 1 by month 6 she already collected $7250 by the first yr she already made almoast 15k not just the 10k for the down payment
He paid her down payment with the cash flow he got from the property. He said it cash flows 1k. Which is insanely good. So he walks into a deal where he pays nothing but closing costs, makes 1k a month, and pays her at the end of 6 months 5k. He does that twice to get her 10k. So he's out of pocket his monthly payments of 375/mo for the first year, which is 4500, and closing costs for a cash flowing property. I'm skeptical that this story is real, is what I'm saying. When she's fully paid back, her home will have appreciated double, and she was already cash flowing like crazy so she could've hired a property manager or just found a way better deal for herself.
@ThreeBelvedere how you would ACTUALLY come to with the monthly payment is dictated by the rent that you think the property can confidently accrue. You typically want to cash flow at least $300/mo. This example Pace gives on how to figure out the payment is not practical it's anecdotal and, as far as I'm concerned, a lie.
Great explanation on creative finance and seller financing! I love how you used the F-150 story to make the concept relatable. It's crucial for sellers to understand that they don't always need to settle for lowball offers if they can find buyers willing to structure deals creatively
Hey I have a question about this, how do you get someone to trust you when doing seller financing because the thing I can't still understand is why would they trust you to make payments and pay off the whole house. Also could you please explain what would entail in a contract when doing seller financing or maybe give a sample contract to make it easier for us to understand the exact terms.
The thing is either they can A put a lien on the property or you can have a part in the contract saying that you will do arbitration for any case where you dont make payments.
My understanding about seller financing is that there should an interest rate for the loan / mortgage just like the bank. In this case if Susan is not charging any interest (principal only) then what is her benefit in this entire deal? Rather she should have hired a realtor and sell her property and get the money at once, don't you think so?
Its either sold at 50k at "whatever"% interest that leads up to about 110k anyway, or she just takes the 0% interest with 110k principal. But here's the kicker... That 50k that it would be sold for? The extra interest goes to the LENDER... NOT her. By doing it with 0% interest, she MADE an extra 60k (or whatever the interest projection would end up being) on the mortgage she financed that would have normally gone to the bank. And nobody else is gonna buy it at 110k with interest. Win/win.
Yes… but… what about a seller that needs the full amount upfront and can’t wait for payments? It doesn’t apply to everyone , only if you come across someone who is not in a rush to get the amount they want
Zillow is frequently wrong about home value. They even get bedroom/bathroom numbers wrong, build dates wrong. As a homeowner, I would rather hold my house than let someone low ball me an offer. I'd rather have tenants, which I have had for 10 years. I think this video is giving folks some false expectations of what kind of deals actually do work in the real world. This is a condescending video, assuming homeowners are stupid.
I totally agree with you. Yeh, this material is based on the assumption that property owners are either stupid or desperate to sell, both of which are very rare if non existent.
The owner legally takes back the house. All the payments + down payment would be total loss for the defaulting buyer, while seller only wins in this situation. Similar story in a lease option. If the buyer/renter default on their obligation, the owner reclaims the asset.
Tx, much appreciated ?… I the or a real estate scenario like this, a) At what point in the process are the deed / title put in the buyers name b) Is the seller required to hold any of the monies received in an (untouchable) escrow account?
I don't have any liquid at the moment but have an opportunity to acquire a single family for under $20k. How should I set up a seller finance deal with this?
What is needed to make this deal legally binding? What if the tenants can’t make payments and therefore you can’t make your payments to the seller? How does each party protect themselves?
So how seller trust to buyer, what kind agreement involves, sign paper and notarized? What if buyer dies etc? Do you take property back, any insurance? Or just limbo?
The only piece in your calculations would be the payment of property taxes and insurance? Who pays for that? Also, what if the Seller wants to exit the deal in three years for example? She no longer owns the asset just the debt so how could she exit?
Q1) But why would she agree to principle only aka 0%? Is it just because she’s getting more than the property is worth? Question 2) What if you had a situation where your purchasing the property at LESS than its value? Let’s say a property valued at 425k and the seller is selling at 350k?.. what would be “fair” terms for both parties?
Hi , can the seller financing work in Canada, as the cost of the houses are running close yo a million canadian dollars. I'm not sure anyone can do the creative financing in Canadian real estate . Any insight is very much useful here
Hello Experts, FHA loan assumtion question. I have a friend interested in selling his house. In Maryland. He currently has an FHA loan at a 2.75% interest rate with $319K remaining on the mortgage. He wants to sale the 600K plus . My wife and I have excellent credit and qualify for a loan up to $700K. Are there options for us besides paying the remaining balance in cash? Can we take out two loans to cover the purchase? My lender is I won't be able to do this unless I have cash. Any creative financing idea?
Pace...on seller finance that you taking over the mortgage doesn't the home owners insurance not being in the buyers name throw up a red flag to the lender?
How does the AFR (Acceptable Federal Rates) work when structuring below the IRS acceptable interest rate? Right now the IRS has it set at about 4.3% and I have my offer to the seller at 2% interest. He is asking if he will run into any gift tax issues or etc. ??
But what is used as collateral? Jose could’ve just left with the truck and never paid you. What did you use for him to be locked in for the F150 payments?
Thanks for sharing. I agree with first comment, ofcourse we should ready to answer such questions or back away. Some things not clear. This should be closing in Title company. Who holds the title? Title be transferred immediately with the contingency of loan? or you finish paying, then you will get the title?
Is this only for rental properties? Because I don’t see this working out if someone plans to live in the house. Because now you will have to pay the mortgage and the seller. Please answer
FYI for anyone wanting to argue numbers: So i checked the numbers in a growth calculator. Since the monthly expense for the RV parking is $375, that’s $4,500 per year. On the low-end using the growth calculator, initial contribution of $50,000 and a 6% annual interest rate, the end of year portfolio value would be $53,000 assuming net of fees. This would be ($1,500) under what she would need to sustain those payments, not including short term capital gains taxes. This is also not considering monthly distributions, so the growth rate and respectively the portfolio value would actually be lower, anywhere from 10%-37% lower depending on her total annual income. On the high end with an initial contribution of $60,000 with an 8% annual interest rate, the portfolio value would be $64,800 assuming net of fees. This is $10,300 above the required $4,500 per year not considering again short term capital gains taxes which again could be anywhere between 10%-37% or monthly distributions. Assuming Pace maintains the $375 to pay for the $110,000 that the owner is asking for, it would take 24.4 years to pay off. In other words, that’s 24.4 years of the client being able to have fun on her RV adventures via guaranteed income as declared via the closing contract. Now, if the client’s goal is to have predictable payments, you could argue they would go with an annual annuity from the $50,000-$60,000, but you would have to remember that with preservation of principal with the purpose of immediate distribution, an immediate annuity would possibly only generate a 1%-1.5% annual interest rate also because there is no growth period prior to distribution. Now, let’s say instead that she had her own portfolio and invested only in index funds like SPDR. We find that, “In the last 30 Years, the SPDR S&P 500 (SPY) ETF obtained a 9.93% compound annual return, with a 14.99% standard deviation (www.lazyportfolioetf.com/etf/spdr-sp-500-spy/).” Those numbers alone justify the $50,000-$60,000 from the wholesale proposition. However, you have to consider the client. The client is not sophisticated. What she sees is, “I’m 60, I’ve got probably 30 years in the tank, I don’t want to look after money to sustain me, and if you run numbers at me I will tell you to get lost. I just want you to solve my problem that I explicitly told you as simply and easily as possible so I can hang in my RV asap with no stress. Don’t give me formulas and breakdowns and mumbojumbo. Give me what I want.” This was what the client told Pace, and Pace delivered. I am a sophisticated client so I would have gone with the wholesale figures. But, I’m not the client today. Remember, this is all about satisfying the client primarily but also presenting an idea that works for all parties. That is what this is here.
‘Most’ people do not want to be landlords. In this scenario Susan wants to travel and doesn’t want to manage a property, she makes her money regardless of if Pace has the property rented or not. Susan, just like a bank/financial institution is guaranteed payment each and every month, regardless of property vacancy. Could Susan hire a management company to manage rental for her? Of course she could. However, in that case she is then also responsible for the expenses associated with that rental property and income is dependent on having a renter. By Susan ‘playing the bank’ financing to Pace, she assumes a set income without any downside risk like unknown expenses popping up that Pace (the new owner and landlord) must assume. Your question is absolutely valid - the main take away here is to fully understand your seller’s jumping off point (their motivation). In doing so, you can create a deal that makes the most sense for all parties involved. Every single deal is completely different that’s the beauty of real estate.
@@NAUTILYFE the deal is absurd for Susan to take. It will take this dude 22 years to pay that 100k with yearly payments of 4500. She could just take 60k cash from one of the other bozos that Pace mentions and invested that cash into ANYTHING that yields 3% and she would come out ahead after 22 years. Or as the fellow you responded to says, she's probably far better off highering a management company and keeping the house.
@@bradleystoldt318 seller finance deals generally always have a balloon payment within the first 5-10 years (though it varies of course). If you’ve ever looked at an amortization schedule, most interest is paid to note holder/financial institution within first 10 years, so not only is she collecting interest but she’s getting her full asking price in 5 years when ballon payment on note comes due. Seller financing is typically used by investors during high rate cycles as a temporary fix. 99% of the time these would be refinanced out before the balloon is due in 3 years or so. If you’ve never bought property like this it’s fair you wouldn’t know or understand. The end game is never to pay Susan for the next 30 years it’s again a temporary solution to get her her asking price (that she’s been unable to get) and as a buyer get a better rate than a bank would offer and cash flow it. Also she said she wouldn’t take 60k she wanted her number at 100k and wouldn’t move off of it - he offered it and she got it. She also said she didn’t want to hire a PM company, she doesn’t want to be on the hook for repairs and dealing with months where there’s no tenants. As the ‘bank’ you get paid regardless of occupancy status. Would a PM be smart, sure, if that was the situation, but it’s not here. That’s real estate, every situation is unique and this just happened to make sense for everyone.
And it's difficult to find people with these special scenarios yeah you could do the postcard thing like he did but let's be realistic that's few and far in between
At 65 I wouldn’t be sure I’d live long enough. Maybe I’d accept those payments for a year or 2 then sell at that full amount. Prop would have likely increased in value equity by then.
How do you ask a seller to do owner finance, any rejections you need to overcome? I guess more seller will not think you are serious with no money down, no skin in the game.
Why wouldn't Susan use the positive cashflow from her tenants to pay for her RV spot? What would this creative financing have looked like if Susan was still making mortgage payments to the bank?
Hey man! I’m a bit confused with loan servicing and was wondering if you could explain a bit? I saw your video with Robuilt and was following along until the loan servicing came up. Who takes over the loan payments from the previous owner once you have the deed? You or the loan servicer or the previous owner? Or is it that the previous owner still makes payments collected by the loan servicer (not you) but the loan servicer then takes a percentage to manage the and collect the previous owners payments? When you say you “hired the loan servicer” what does that mean. Thank you so much!!
Hey guys! Appreciate your response to my question: Seller asked me what if you stop to make me a monthly payment? She says: "I don't want to go to court if you don't pay me" Please advise!!! Also if someone can touch base with me to provide high level of preparation to make this deal done - i would highly appreciate it!!!
I just got a listing signed and they want to do Seller financing. List price of $699,999 20 year term at 2% with minimum 30% down payment. Monthly with be $3,500 plus taxes, HOA and insurance. I attempted to run these numbers at a 15 year term and they were significantly higher around $4,173. What do you think it’s the best idea to do from here? A Balloon payment at the 10th year maybe 5th year I would appreciate your outlook.
![Kodak Black - Versatile 4 [Official Video]](http://i.ytimg.com/vi/VcP_1Ua__vY/mqdefault.jpg)
Legend has it he’s still talking
Just came across your content, it amazes me how you don’t put money down. I’m over here trying to save up $40k to put down 20% down for a rental property that I will like to purchase this year if possible. I’m currently informing myself through RUclips. I have not graduated from RUclips yet 😂 … will keep on watching your content and see what happens.
I was listening to Biggerpockets and this other groups and all I hear is for your second property is 20% down so that’s where I get my 40k number from…
instead of trying to “SAVE UP 40K” you could always use business credit to fund it especially if it’s going to be generating passive income.
YT University is riddled with ignorant and deceptive and greedy "teachers/professors", just like this guy pace.
Stop being the textbook naive viewer. Pace is the textbook lazy man and selfish greedy slippery salesman. The F150 Story is a age old Sales Mantra of "Facts Tell, Stories SELL"
For mine I just tell them I’m going to live in one side of the duplex and do 3.5% or I va Loan it and rent out
Susan got hosed!
LOL you are obviously not in real estate.
@@PaceMorby nah bro, you gotta own this one..Susan got had, if Susan exist at all 😂 Why would she sell to you only to wait weeks/months for you to collect 4-5x more than what your paying her? At that point I’d imagine she’d list it on Airbnb herself.
But your video was very well edited 💯
@@justadrumPoint is she wants to sell. She wants to sell and travel, nobody is biting on her $110k price, he (in exchange for 6 months grace period, her paying closing fees, and the ability to make payments) buys her property for her asking price + $10,000. She charged him $10k for accepting payments, no problem because he actually isn’t “paying” anything, the rental income covers the payments and then some. Everybody wins!
@@justadrum Susan doesn’t exist that’s the point. Bro is clearly blowing smoke all over in the form of glitter and BS
Yeah. Susan didn't understand the time value of money. At $375 a month, she'll finally break even in around 20 years, assuming she lives that long if she's elderly and retired. Plus, with inflation, that $375 will feel like $230 in 20 years. She could have put that $60k into a high dividend yield savings account and earn or put it into a monthly paying dividend stock and earn that $375 a month in dividend payments while keeping her 60K principle.
How do you structure deal , in case buyer is delinquent on payments , like 3 months late repossess car ? Or stipulation and conditions ?
Thx
Yoooo! This is EXACTLY what I’ve been needing to learn! Thank you! 🙌🏾🙏🏾💪🏾
K. So my two questions are:
1. I'm guessing the collateral you would give in this agreement would be the house? So if you don't make payments they could take back the house? Is there any other way to make them feel comfortable that they are guaranteed their money each month and won't be chasing after you just as much as if they had kept the place with a tenant? Cuz in alot of ways you're just being a glorified tenant. So what makes it more of a sure fire thing with you?
2. Does this only work if they have. I mortgage? How would this work if they do? Don't they need to pay off the mortgage on sale? If they don't, then wouldn't Subject to have to happen, and then any additional amount they want over the mortgage could be seller financed? Is there a way to get around the mortgage entirely to do this?
3. How should you play this if the owner has a mortgage higher than the asking price and they're already willing to take a loss? Would subject to and seller finance be totally off the table?
join the mentorship!!!!!
4. What happens if you want to sell the property after buying on seller financing? Can Jose sell his F150 before paying it off? Can you sell the home before paying it off?
I don't think we'll ever get answers here lol
Yes they have to already have the property paid for in full to do seller financing.
If they have a mortgage you can do a sandwich lease option. This means you'd rent to own the property with permission to sublease. You'd then find a retail buyer who plans on living in the home and set up different terms with them that would allow you to make money on the down payment, cash flow every month, and make some money after the sale is completed. These are typically 3-5 year lease options.
Awesome example of seller financing, though I wished it was always as good as this example
Pace, could you say how often you get a seller willing to do principle only payments at such low prices? It just sounds too good to be true.
And the F150 story only works if she doesn't catch on that the guy actually paid 3 times your blue book price. Shouldn't she, by the same logic, ask you for 3x her house around 300k?
You paid 110k for a home that, by the time it's paid for, will have probably appreciated to be worth double that price.
She can ask for 3 times but if the only person willing to pay what you want is at your number and it’s not worth your number do you take the loss and sit on it and keep getting low balled and never get a good sale even close to wat u want or do u raise it and never sell it just because it’s a contract for 10 years don’t mean it will take that long to pay in full if you need to sell it u get rid of the property
She gets the 10k down payment plus a monthly payment also from month 1 by month 6 she already collected $7250 by the first yr she already made almoast 15k not just the 10k for the down payment
What in the world are you talking about? $375/mo is what agreed to pay her. That's $4500 a year. @ThreeBelvedere
He paid her down payment with the cash flow he got from the property. He said it cash flows 1k. Which is insanely good.
So he walks into a deal where he pays nothing but closing costs, makes 1k a month, and pays her at the end of 6 months 5k. He does that twice to get her 10k. So he's out of pocket his monthly payments of 375/mo for the first year, which is 4500, and closing costs for a cash flowing property.
I'm skeptical that this story is real, is what I'm saying. When she's fully paid back, her home will have appreciated double, and she was already cash flowing like crazy so she could've hired a property manager or just found a way better deal for herself.
@ThreeBelvedere how you would ACTUALLY come to with the monthly payment is dictated by the rent that you think the property can confidently accrue. You typically want to cash flow at least $300/mo. This example Pace gives on how to figure out the payment is not practical it's anecdotal and, as far as I'm concerned, a lie.
Great explanation on creative finance and seller financing! I love how you used the F-150 story to make the concept relatable. It's crucial for sellers to understand that they don't always need to settle for lowball offers if they can find buyers willing to structure deals creatively
Exactly
Love your content brother! I was Able to make $20,000 last week with creative Financing.
Henry. That's dope!!!
Does this only work i they've already paid off the house? Cause usually they're relying on the big payment to pay back the bank
Yes seller finance is when there's no existing debt - everything is paid off
Gracious goodness, Goodness, gracious!
This is a such great information articulated so well. Thank you for sharing this Pacy!
Thanks - What documents would i need to present to the seller if they decide to accept terms agreement? please
Hey I have a question about this, how do you get someone to trust you when doing seller financing because the thing I can't still understand is why would they trust you to make payments and pay off the whole house. Also could you please explain what would entail in a contract when doing seller financing or maybe give a sample contract to make it easier for us to understand the exact terms.
The thing is either they can A put a lien on the property or you can have a part in the contract saying that you will do arbitration for any case where you dont make payments.
My understanding about seller financing is that there should an interest rate for the loan / mortgage just like the bank. In this case if Susan is not charging any interest (principal only) then what is her benefit in this entire deal? Rather she should have hired a realtor and sell her property and get the money at once, don't you think so?
Its either sold at 50k at "whatever"% interest that leads up to about 110k anyway, or she just takes the 0% interest with 110k principal.
But here's the kicker...
That 50k that it would be sold for? The extra interest goes to the LENDER... NOT her.
By doing it with 0% interest, she MADE an extra 60k (or whatever the interest projection would end up being) on the mortgage she financed that would have normally gone to the bank.
And nobody else is gonna buy it at 110k with interest.
Win/win.
Well, except for the lender of course, he's out of a job...
Yes… but… what about a seller that needs the full amount upfront and can’t wait for payments? It doesn’t apply to everyone , only if you come across someone who is not in a rush to get the amount they want
Wow. You just blew my mind. Learn so much in 18 min video. Thanks
Zillow is frequently wrong about home value. They even get bedroom/bathroom numbers wrong, build dates wrong. As a homeowner, I would rather hold my house than let someone low ball me an offer. I'd rather have tenants, which I have had for 10 years. I think this video is giving folks some false expectations of what kind of deals actually do work in the real world. This is a condescending video, assuming homeowners are stupid.
I totally agree with you. Yeh, this material is based on the assumption that property owners are either stupid or desperate to sell, both of which are very rare if non existent.
I appreciate the content. I do have one question. How is the "wholesaler" that brought you the deal paid?
What if they default on the payment? What is the legal recourse, if any?
The owner legally takes back the house. All the payments + down payment would be total loss for the defaulting buyer, while seller only wins in this situation. Similar story in a lease option. If the buyer/renter default on their obligation, the owner reclaims the asset.
This is great explanation for seller (creative) finance. I am assuming if she did not have it paid off, the payment would be for the payment amount?
Tx, much appreciated
?… I the or a real estate scenario like this,
a) At what point in the process are the deed / title put in the buyers name
b) Is the seller required to hold any of the monies received in an (untouchable) escrow account?
I don't have any liquid at the moment but have an opportunity to acquire a single family for under $20k. How should I set up a seller finance deal with this?
I want to learn to tell stories like you. Great skill!
You can do it!
This man and his creative financing tips are about to make me a fucking multi millionaire
Pace you are a good teacher
Thanks I try
Poor Susan. Would’ve made more money hiring a property manager. Still would’ve made $800+ a month.
Hands down one one of the best if not the best financial breakdown video on all of the internets. Bravo 🙌!
Thank you! Glad you enjoyed the video
This is GOLD
How does the contract works in this case going through individual agreements?
but how do you wrap the deal in the contract what clause do I need to write or what should be there that doesnt affect anybody ?
Dope content my brother. Came at the perfect time. #GodsWork
How would you negotiate seller financing if the seller is listing the property with a real estate agent?
it all sound great but who owns the home title and deed ? PLEASE ANYONE LET ME KNOW TO UNDERSTAND LOVE YOU ALL GUYS
What is needed to make this deal legally binding? What if the tenants can’t make payments and therefore you can’t make your payments to the seller? How does each party protect themselves?
Do you still get title and deed at time of closing, and are you able to refinance before paying Susan off?
8:09 “Susan, I am crazy, just like you, I’m belligerent. I want a specific price” LOL #saleshumor
Does this strategy works better for off market or on market?
Great info, now I've grasped the concept just as Susan did lol..thanks
So how seller trust to buyer, what kind agreement involves, sign paper and notarized? What if buyer dies etc? Do you take property back, any insurance? Or just limbo?
how can the buyer get new mortgage to pay off (balloon) the seller, if they only have a deed a trust?
The only piece in your calculations would be the payment of property taxes and insurance? Who pays for that? Also, what if the Seller wants to exit the deal in three years for example? She no longer owns the asset just the debt so how could she exit?
How do you protect yourself from them not paying you on the payments and they still have your car? Or house? Or thing… that they seller financed.
Q1) But why would she agree to principle only aka 0%? Is it just because she’s getting more than the property is worth?
Question 2) What if you had a situation where your purchasing the property at LESS than its value? Let’s say a property valued at 425k and the seller is selling at 350k?.. what would be “fair” terms for both parties?
Love this story! I'm sending this to agent friends to expand their minds.
Awesome!!
Pace I like your style. Priceless information.
I appreciate that bro!
since your seller is up there in age, what happens when she passes? how long is the term for you to pay off the remaining balance?
This sounds like a rental agreement. Do they not still retain of the property untill paid in full?
Hi , can the seller financing work in Canada, as the cost of the houses are running close yo a million canadian dollars. I'm not sure anyone can do the creative financing in Canadian real estate . Any insight is very much useful here
Where can I find how this looks on paper at?
What does principle payment means?
Lotta trust for the truck to do payments when you arent a dealer, nor have the means to repo it like a bank etc. At least the house cant be hidden
As a noobie, I must ask. Who holds the deed until payments are complete?
Pace you changed the game!
MAN COME ON BROTHER ❤❤❤ LOVE THIS!!! I CAN ACTUALLY FOLLOW AND UNDERSTAND YOU…. THANK YOU SO MUCH
Great stuff. I would like to apply this strategy. Would to know what are the best properties that this strategy works?
It how do you hold the buyer accountable and when does the seller transfer the title??
Is this possible in the uk
So what would've happened if Jose went around the corner and wrecked the truck? Do you think Jose is going to still make a payments?
And how does Jose insure said vehicle?
If you do the paperwork properly you will legally be a lien holder and can sue if he stops paying
Good luck with “sue” ideas
When does closing normally happen on a deal like this?
What was the mortgage on the property?
Hello Experts,
FHA loan assumtion question.
I have a friend interested in selling his house. In Maryland. He currently has an FHA loan at a 2.75% interest rate with $319K remaining on the mortgage. He wants to sale the 600K plus . My wife and I have excellent credit and qualify for a loan up to $700K. Are there options for us besides paying the remaining balance in cash? Can we take out two loans to cover the purchase? My lender is I won't be able to do this unless I have cash. Any creative financing idea?
Why are there closing costs if it’s seller financed?
G status babyyyy🤑✌️
Pace...on seller finance that you taking over the mortgage doesn't the home owners insurance not being in the buyers name throw up a red flag to the lender?
How does the AFR (Acceptable Federal Rates) work when structuring below the IRS acceptable interest rate? Right now the IRS has it set at about 4.3% and I have my offer to the seller at 2% interest. He is asking if he will run into any gift tax issues or etc. ??
It’s hard to believe she would’ve let the house go without any skin in the game upfront from you. Mazel tov 🍾
How will seller finance will get affected with US or global currencies going digital?
So much value, setting up my first subto closing! And I'm not a knucklehead realtor
That's dope, Ivan!!
What if the buyer defaults on payments ? When then ?
The seller can take back the property then
But what is used as collateral? Jose could’ve just left with the truck and never paid you. What did you use for him to be locked in for the F150 payments?
That's why you always got to vet the people you work with
@Pace Morby, do you have a video to send to sellers?
PaceMorby
We get it - but what the risks to the buyer and seller?
So if i buy the house seller financing and im paying the previous ownwer do i have to pay anyone else? After deal is closed?
Thanks for sharing. I agree with first comment, ofcourse we should ready to answer such questions or back away. Some things not clear. This should be closing in Title company. Who holds the title? Title be transferred immediately with the contingency of loan? or you finish paying, then you will get the title?
Is this only for rental properties? Because I don’t see this working out if someone plans to live in the house. Because now you will have to pay the mortgage and the seller. Please answer
You can live in the house, just work both payments into your budget. But, I typically rent the house out.
@@PaceMorby Thank you.
FYI for anyone wanting to argue numbers:
So i checked the numbers in a growth calculator. Since the monthly expense for the RV parking is $375, that’s $4,500 per year. On the low-end using the growth calculator, initial contribution of $50,000 and a 6% annual interest rate, the end of year portfolio value would be $53,000 assuming net of fees. This would be ($1,500) under what she would need to sustain those payments, not including short term capital gains taxes. This is also not considering monthly distributions, so the growth rate and respectively the portfolio value would actually be lower, anywhere from 10%-37% lower depending on her total annual income. On the high end with an initial contribution of $60,000 with an 8% annual interest rate, the portfolio value would be $64,800 assuming net of fees. This is $10,300 above the required $4,500 per year not considering again short term capital gains taxes which again could be anywhere between 10%-37% or monthly distributions. Assuming Pace maintains the $375 to pay for the $110,000 that the owner is asking for, it would take 24.4 years to pay off. In other words, that’s 24.4 years of the client being able to have fun on her RV adventures via guaranteed income as declared via the closing contract. Now, if the client’s goal is to have predictable payments, you could argue they would go with an annual annuity from the $50,000-$60,000, but you would have to remember that with preservation of principal with the purpose of immediate distribution, an immediate annuity would possibly only generate a 1%-1.5% annual interest rate also because there is no growth period prior to distribution. Now, let’s say instead that she had her own portfolio and invested only in index funds like SPDR. We find that, “In the last 30 Years, the SPDR S&P 500 (SPY) ETF obtained a 9.93% compound annual return, with a 14.99% standard deviation (www.lazyportfolioetf.com/etf/spdr-sp-500-spy/).” Those numbers alone justify the $50,000-$60,000 from the wholesale proposition. However, you have to consider the client. The client is not sophisticated. What she sees is, “I’m 60, I’ve got probably 30 years in the tank, I don’t want to look after money to sustain me, and if you run numbers at me I will tell you to get lost. I just want you to solve my problem that I explicitly told you as simply and easily as possible so I can hang in my RV asap with no stress. Don’t give me formulas and breakdowns and mumbojumbo. Give me what I want.” This was what the client told Pace, and Pace delivered. I am a sophisticated client so I would have gone with the wholesale figures. But, I’m not the client today. Remember, this is all about satisfying the client primarily but also presenting an idea that works for all parties. That is what this is here.
Love how you explain that pace! Really makes sense👍🏽
What happens if the payments never get paid? If the term gets defaulted on?
house goes back to buyer, depends on your contract tho
But the question is, why would Susan sell you the property for $345 payment instead collecting $1000 from the rent??
‘Most’ people do not want to be landlords. In this scenario Susan wants to travel and doesn’t want to manage a property, she makes her money regardless of if Pace has the property rented or not. Susan, just like a bank/financial institution is guaranteed payment each and every month, regardless of property vacancy.
Could Susan hire a management company to manage rental for her? Of course she could. However, in that case she is then also responsible for the expenses associated with that rental property and income is dependent on having a renter. By Susan ‘playing the bank’ financing to Pace, she assumes a set income without any downside risk like unknown expenses popping up that Pace (the new owner and landlord) must assume.
Your question is absolutely valid - the main take away here is to fully understand your seller’s jumping off point (their motivation). In doing so, you can create a deal that makes the most sense for all parties involved.
Every single deal is completely different that’s the beauty of real estate.
A dumb seller
@@NAUTILYFE the deal is absurd for Susan to take. It will take this dude 22 years to pay that 100k with yearly payments of 4500.
She could just take 60k cash from one of the other bozos that Pace mentions and invested that cash into ANYTHING that yields 3% and she would come out ahead after 22 years.
Or as the fellow you responded to says, she's probably far better off highering a management company and keeping the house.
@@bradleystoldt318 seller finance deals generally always have a balloon payment within the first 5-10 years (though it varies of course). If you’ve ever looked at an amortization schedule, most interest is paid to note holder/financial institution within first 10 years, so not only is she collecting interest but she’s getting her full asking price in 5 years when ballon payment on note comes due.
Seller financing is typically used by investors during high rate cycles as a temporary fix. 99% of the time these would be refinanced out before the balloon is due in 3 years or so. If you’ve never bought property like this it’s fair you wouldn’t know or understand. The end game is never to pay Susan for the next 30 years it’s again a temporary solution to get her her asking price (that she’s been unable to get) and as a buyer get a better rate than a bank would offer and cash flow it.
Also she said she wouldn’t take 60k she wanted her number at 100k and wouldn’t move off of it - he offered it and she got it. She also said she didn’t want to hire a PM company, she doesn’t want to be on the hook for repairs and dealing with months where there’s no tenants. As the ‘bank’ you get paid regardless of occupancy status. Would a PM be smart, sure, if that was the situation, but it’s not here. That’s real estate, every situation is unique and this just happened to make sense for everyone.
I agree
Where can someone get leads about properties like this?
Check out my entire playlist here: ruclips.net/p/PL2Y6uEs9DYr0ZF-dV3M0_e-QsAh8S3TSK&si=M9h_hiC_HfAR3z6a
Does anyone know of these methods being used here in Australia?
How do i structure Seller Financing if i have a mortgage on rental property ? ( i am the seller with mortgage)
What happens if you seller finance your home and the buyer later sells?
Pace this video was raw 👌
Pace you're a HONEST GENIUS my friend ✌🏽️🐊
I appreciate that
Is this all done with a promissory note? Did she just quitclaim the property to you? How does she know you’ll pay every month?
Great video Pace
Appreciate it!
So what’s your approach when you’re dealing with commercial when it comes to seller financing.
And it's difficult to find people with these special scenarios yeah you could do the postcard thing like he did but let's be realistic that's few and far in between
At 65 I wouldn’t be sure I’d live long enough. Maybe I’d accept those payments for a year or 2 then sell at that full amount. Prop would have likely increased in value equity by then.
How do you ask a seller to do owner finance, any rejections you need to overcome? I guess more seller will not think you are serious with no money down, no skin in the game.
Why wouldn't Susan use the positive cashflow from her tenants to pay for her RV spot?
What would this creative financing have looked like if Susan was still making mortgage payments to the bank?
Does seller financing only work if the seller is free and clear of the property? Meaning they do not have a mortgage remaining?
ruclips.net/video/-IIDN2AQQsg/видео.html this will help... Seller Finance is free and clear Subto has debt, Hybrid is a combo of both
Pretty powerful stuff thank you
Hey man! I’m a bit confused with loan servicing and was wondering if you could explain a bit? I saw your video with Robuilt and was following along until the loan servicing came up. Who takes over the loan payments from the previous owner once you have the deed? You or the loan servicer or the previous owner? Or is it that the previous owner still makes payments collected by the loan servicer (not you) but the loan servicer then takes a percentage to manage the and collect the previous owners payments? When you say you “hired the loan servicer” what does that mean. Thank you so much!!
Our title company services the loan on our subtos and handles all that for a $25 fee.
With owner financing will the county recognize the buyer as the new property owner on property appraisal website etc. ?
Yes assuming you file the deed with the county. In some cases I don't though, it just depends on the deal.
Interesting. @@PaceMorbycan you give a reason or two why you would not file the deed with the county?
This is amazing 🔥
Hey guys! Appreciate your response to my question: Seller asked me what if you stop to make me a monthly payment? She says: "I don't want to go to court if you don't pay me" Please advise!!! Also if someone can touch base with me to provide high level of preparation to make this deal done - i would highly appreciate it!!!
I just got a listing signed and they want to do Seller financing. List price of $699,999 20 year term at 2% with minimum 30% down payment. Monthly with be $3,500 plus taxes, HOA and insurance. I attempted to run these numbers at a 15 year term and they were significantly higher around $4,173. What do you think it’s the best idea to do from here? A Balloon payment at the 10th year maybe 5th year I would appreciate your outlook.