Are you thinking of going into seller financing? Do you want to know how you can earn with it? In this video, I’ll show you how a typical deal works and how owner financing works for the seller.
How seller financing works for the seller. this is coming from the point of view that financing. i’m going to show you how it so, in this video, i’m going to run i’m not an artist but i’m going to do the best i can over here. and i’m going to show the road deal. it’s not a home run, it’s not slim, it’s just an average
Deal. the reason i know all this stuff is my name is mitch stephen, houses series. and i’ve been buying and selling houses for over 2 decades and i’ve been seller financing about 65 to 75 percent of them over my entire career. so, i may not know everything in the world but i know a little bit about that.
In a previous video, we had used a rent formula $1500. we needed to know what we could sell that rent formula that we could sell that house for 165,000. so, based on a $1500 rent, we established that we could sell the house for $165,000. this is important because before you can start to even remotely negotiate on
What you want to buy a house for, you got to know what you can sell it for. so, you might want to go back and watch that video where i back into the rents to establish the ofvv or the owner finance value. so, here we are we can sell this house for 165. i really like to buy houses in such a fashion owed twice what i
Have in it. so, let’s assume, lot. since i can sell this house for 165,000, for 82,500. there’s a lot of reasons why people will sell their houses at this kind of discount. we won’t go into that minutia now. but as of right now in the conversation, i’ve got the house under contract for 82.5 (thousand). now,
I always borrow 2,000 over my acquisition cost because it cost me about $2,000 to get myself in a position to be able to talk to this person to buy their house. so, i need to get my $2,000 back. if i leave $2,000 worth of advertising money in 1,000 houses a year, that’s $200,000 i’ve left laying around that year. if i do
It 5 years in a row then i’ve left a million dollars laying around in advertising. so, i like to not do that. i like to get my advertising. so, i’m going to go ahead and go to my private lender who by the way doesn’t argue with me about borrowing this $2,000. your cancel your loan application because of this.
But my private lender is gonna loan me 84,500. he’s going to loan that to me at 10% for 20 years and my payment is going to be $910. that’s the acquisition side. i now own the house and i’m now making these payments to my private lender. so now, we’re going to go to the sales side. i’m going to sell this house for $165,000
And i’m going to get 16,500 or 10% down. and i do all the time. and s,o 165,000 minus 16,500 cash down payment, that equals a 148,500 that i’m going to carry for my buyer and i’m going to carry this at 20% for 20 years. and their payment to me is going to be $1,435. so, this is what i have going out and this is
What i have coming in. i’ve cleared myself $525. how i like to look at it is… and this is important to note, how much of my money out of my pocket do i have in this house? zero. i borrowed it all from a private lender. not only did i borrow what it took to buy it. i always also borrowed my advertising
Expense. and it’s right there. so, when i collect money. it goes in this pocket right here. it’s what i pay my bills with. what i pay my car payment, my house payment, my utility bills, what i buy groceries with. okay? so, that’s my money $16,500 to create a 525-dollar a month positive cash flow. that’s going to go on
For 20 years. times 20 years or 240 months it comes up to $126,000 that’s what i’m owed in the future. if you add this 16.5(thousand) plus the 126,000, it comes out to one 142.5(thousand). i got kind of sloppy there. it comes out to the… the total profit on this house… potential profit 82.5(thousand)
And borrowed 84.5(thousand) heard in the past or you hear my podcast or you hear me some places statements say that i’m a multi, multi, multi, multi, multi-millionaire is because every time i do one of these houses, i’m making like 142 (thousand), 126 (thousand) of it which is owed to me in the future in the
Form of monthly payments. but i’ve done this thousands of times in a row. there’s hundreds of people that owe me these balances, you know? and if they don’t pay me, then i’m going to collect their house back and sell it to someone else. so, that’s why this business is so lucrative. that’s why i’m excited about this
Business. and what i love most about it is i don’t get calls for tenants and toilets because i’m the bank. and that’s what i want you to be is the bank. so, if you have fun looking at this case study and these numbers, there’s more to come. please hit the subscribe button. and if you’ll do me a big favor and hit
That like… and if there’s any love you things there, just pound on that for a while, okay? but at least the likes and the subscribes. thank you very much. we’ll talk to you in the next episode.
Transcribed from video
How Does Seller Financing Work For The Seller By Mitch Stephen