What is Owner Financing a Real Estate Deal? | OFF THE MARKET Podcast | SUMMIT NOW

Looking to build a real estate portfolio worth millions? Seatle Real Estate expert, Jim Thorpe details tips on how to grow a $500k investment into 10 million dollars. Learn how to get invest in real estate passively and how to build wealth in real estate.

Why owner financing is just the cream of the crop yeah um i mean i’m still so new to it too and so before it was just standard purchase sale agreements that i worked with of just a standard cash out here’s what i’m offering you when everything’s all said and done yeah here’s what i’m giving you for earnest money to essentially carry the deal until we fully close

In and can fund it um i’m gonna go out and find a partner to fund this or i’m gonna find a way to fund it myself through hard money cash or whatever it is owner financing now allows me to have the understanding that there’s a way for me to essentially treat the owner like a bank for them to carry essentially a loan on the property for them for me to then come in

Do work to it increase the value but also for them to make in a set amount of percentage or whatever it is that we can agree upon uh of a monthly payment for them to continue to make money on their property but no longer have to deal with you know x y or z which would be tenants uh remodeling costs or anything like that so they get to continue to make money in

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The property while i get to do all everything that i had planned for it and carry out a note which our standard terms are between you know four to five years um so if you were coming in and you got an owner finance deal and you decided like okay i’m gonna flip it and you have to pay them an x amount per month correct you’re going out and getting the loan to cover

That and then so just upon completion i’m trying to explain to people why that’s so great yeah and then at the end when you make your profit you give them their balloon payment correct so you have essentially the length of the term to completely finalize your deal so if the project is going to take you 18 to 20 you know 12 to 18 months to finalize and let’s

Just use quick math for example i buy a property for a million dollars and i find a way to pay them 10 percent up front and say i’m gonna give you a hundred thousand dollars at closing right and pay you a 4.2 interest on the property for the next five years so then i’m paying them forty two hundred dollars a month right and let’s just use another example with

The fourplex and the rents before we’re renting out a thousand dollars but i’m coming in and i’m now putting in uh ti increase arv and getting it up to where i can rent it out at you know standard seattle rental rate which would be twenty seven twenty eight hundred dollars we’ll use easy math and we’ll just do three thousand dollars three thousand dollars for

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Four units twelve thousand dollars now i’m then essentially taking my profit paying the owner their percentage and then profiting the x amount for the next amount of time that i have that set yeah and then at the end of the five years i’m then paying them their balloon payment on what i owe them which would be the 900 000 and i’d have the five years essentially

To completely reap in the benefits and the profit on it the only downfall is if you do run into a situation and you can no longer fund that said deal then the owner then gets to get the property back with all the new yeah upgrades and done things that you’ve done to it and so it’s almost a win-win for the owner they’re getting money for five years and if anything

Goes wrong they get it back

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What is Owner Financing a Real Estate Deal? | OFF THE MARKET Podcast | SUMMIT NOW By Summit Capital Partners