How To Structure An Owner Finance Property As The Seller Of A Piece Of Real Estate

In this video I answer a question that was text in about how to structure an owner finance on a property that is being acquired subject to.

Good morning hampton roads and welcome to virginia’s only local real estate investing podcast where we get to talk about local investors local deals and all things local i’m your host the founder of the master investor academy and author of my best-selling book work just gets in the way of making money scott jelinek how’s everybody doing today if you have any questions

Comments concerns properties you’d like to sell things you’d like to discuss you can go ahead and text me at 757-699-4227 and as well as tomorrow and sunday today is friday tomorrow and sunday i am having a live in-person two-day workshop if you are local in the hampton roads area um go ahead and text me at 757-699 and i will get you set up with registration

We still have one spot left we’re very small this time because of uh because of the governor’s orders or gathering sizes so it’s going to be a very small event we’re going to go over everything you need to know about getting uh hitting the ground running for 2021 which is going to be a fantastic year in real estate investing uh before we get started if you have

Not done so already go ahead and subscribe to this channel if you are on the podcast if you can leave me a rating and review i greatly appreciate it it helps me to get this out to more people and also give me a thumbs up on the video just so i know that you’re there and that you’re watching i appreciate it so what i wanted to talk to you about today i got an

Email from josh i’m sorry it was a text yesterday from josh asking how to structure an owner finance he says i’m buying it sub two how would he structure the sale of it and so there are several different ways to structure the sale and i thought that was a great topic to discuss today um before we get into it i want to clarify that i’m talking about disposition

Today this is if you’re selling the property that you bought sub 2. this is not the same as when we’re buying a property with owner financing we wouldn’t we wouldn’t um do the same structure so there’s multiple different ways when you are selling a property that you bought sub 2. so we’ll start off with the simple ones if you want the the easiest of all is you

Have the option to you’re allowed to if you’re if you’re buying it sub 2 you’re allowed to wholesale a sub 2 meaning if somebody if if somebody had a property they agreed to sell me and i’m just going to make up numbers and say they agreed to sell it to me for 100 grand and they’re not behind on the mortgage and say it’s worth 120 150 or 100 just say it’s worth

See also  Is Clintons Campaign Finance Reform Plan Just a Band-Aid?

A hundred it’s worth what we paid for we can still wholesale it meaning we can advertise it now at five grand 10 grand 20 grand down take over payments and at that time if we found our buyer with that 20 grand down we would then set up a closing and our seller now would be selling directly to our buyer like a regular wholesale deal the only difference is he’s

He’s putting that down payment down that’s the money you’re going to make and now he’s taking over the the property subject to the existing financing so that is one way if you have not already closed on it and and there wasn’t a lot of equity and you wanted to you can just assign it much like a wholesale lease option you can just assign it make your assignment

Fee usually it’s 5 10 20 grand depending on the value and the price of the house the price point of the house um you can make your down payment it’s quick easy painless you’re out of it with no money now you don’t even have to pay closing costs you’re just you’re assigning it just like a regular wholesale deal another option is that you can own or finance it you

Can do an actual owner financing and we’re going to clarify what i mean by actual and the other way that i do a lot of them you can do an actual owner financing meaning again we’ll use those same numbers say it’s worth a hundred and say it’s worth 150 but you’re buying it sub two for a hundred you can still sell it at that 150 and do actual owner financing meaning

You’re going to have a closing at an attorney’s office they’re going to write up a note indeed of trust for 30 you know i generally do 30 years you’ll get a down payment you’ll amortize it over the 30 years there’ll be a monthly payment that goes to you now you’re going to collect that monthly payment and you’re going to pay the existing one does that make sense

To you it’s a wrap so you’re going to collect the monthly payment that your buyer is paying you every month and now you’re going to be paying the underlying mortgage the one that you bought sub 2. all right so i hope that makes sense to you then the next option would be the way i sell my slow flips would be to sell it on a land contract i prefer this method and

See also  NASCAR Diecast Review ep.260| Jimmie Johnsons 2020 Ally Financial White Camaro ZL1 1LE

I’ll explain to you why so when you when you sell on a land contract it’s very similar to your selling with owner financing the difference is there’s not going to be a closing the uh the paperwork is all done in-house you can do it at your office you can do it at starbucks you can do it at the house so there is no closing which eliminates that expense two three

Thousand dollars if you take both sides so there’s it can be done immediately there’s no title search there’s no waiting for the lawyers you can literally meet somebody today and they have the 10 grand down and do the paperwork today there is no title transfer so if they default you don’t have to go through a foreclosure process now there’s ways around that too

We’re not going to discuss today where you can have pocket deeds and such but um if somebody defaults they have they have the deed in their name so it’s it’s more challenging for you to take back possession with a land contract you never gave up possession the deed is still in your name so if they were to default you can go through a regular process as if they were

A tenant a regular eviction process so that’s a big benefit the other side is you can recycle them meaning if somebody stayed five years and decided they wanted to leave now unlike if you wholesaled it sub two you’re just completely out of it and if that person ever defaulted it’s between them and the seller you just got your assignment fee with this structure

You’re still involved they’re paying you every month you’re paying the mortgage every month if three years from now five years from now the person defaulted you still have that property now and you can put somebody new in there collect another 5 000 down or whatever it may be and change the price if property values were going up you know you can you can adjust

Accordingly as well so those are just three basic strategies that you can use if you bought a property sub two to dispose of them there’s also you can always do regular lease options you can also do regular rentals if you were into that there’s tons of different things you can do but i wanted to touch on those three because i think they’re the most prevalent you

Can do an actual loan of financing you can do a land contract or you can do the very first thing we talked about which is just when you go ahead and wrap it so um there’s a three different strategies or you can wholesale the lease option i’m sorry wholesale the sub two so you know some people make their entire business wholesaling sub twos and there’s nothing

See also  TAROT Finance - 55K+ LEVERAGED LP Farming on FTM Fantom

Wrong with that where you’re basically marketing for properties that don’t have enough equity to sell conventionally you contract them and now you market for buyers who want no credit check five thousand ten thousand twenty thousand down and you connect the two and you make that fee and you can make a great living just doing that business model there are so many

Ways this is what we were talking about the other day there are so many ways to make money in real estate but my my whole focus is always to tell you to focus it’s come up with what strategy you love what what lights you up and what you want to do and do that you know there’s a million ways to make a million dollars we always talk about that choose one there’s

So many different strategies in real estate but when people try and dabble in all of them they do none of them well i hope that makes sense to you so pick which strategy you like you can dabble them in the beginning and see which one resonates with you but once you find what you like and what you want to do then you say i’m the guy who does that this is what i

Do and um you know it doesn’t have to be any of the strategies i even teach you pick what you like there’s so many strategies out there you pick what you like and then you focus on that and you be the best at that one particular strategy um i hope this guy i hope this helps you guys and uh thanks for texting me that question if anybody else has any questions or

Even questions on what we’ve discussed feel free to text me at 757-699 and i would be happy to go over it with you and um exchange some some answers and if you have any further questions so we can uh get clarity for you so you can proceed with this business and make 2021 your best year ever um that’s all i got for you guys today do something today your future

Self is going to thank you for thank you for watching if you have not done so already click the like button on here just so that i know you’re watching because uh i appreciate it it keeps me going every day to uh to know that you’re out there and you’re watching and enjoying these and i will speak to you on the next one have an absolutely

Transcribed from video
How To Structure An Owner Finance Property As The Seller Of A Piece Of Real Estate By MasterInvestor1