Over the past few weeks I have had several conversations with investors who say they can never get any seller to give them seller financing terms. This just doesn't make sense to me. I have in the past, and still do have success getting seller financing terms on many of the properties I buy. After having these conversations and several days to think about what the investors said to me and why they are having absolutely no success getting the sellers to give them any type of seller financing terms is why I decided to write this article.
One of the investors I talked with told me he is buying as many as 35 houses every month, paying cash for them. This investor has already put together a group of private lenders who provides him with all of the money he needs to buy his properties. For him and all others who have private lenders providing them with the cash they need in my opinion have a wonderful thing going for them and I wish them much success. This article isn't for those who already have all the money they need to do their deals. This article is for the majority of investors I meet who have little or no money or they don't have private lenders who are willing to fund their deals.
Of course, cash is a part of the real estate investing business but it is not the only way to buy houses. I am living proof of that and so are my mentors. We realize that even if you have good credit and some money to invest eventually your money will run out and your business could come to a grinding halt if you don’t have the ability to borrow.
Regardless of how much money and good credit you have, why not buy a property you plan to keep long term as an income property with seller financing terms every once in a while and save your availability to borrow money from private lender's for other killer deals you find where seller financing just won't work or just isn’t a possibility?
The following is a list of “12” different examples of different things I say to sellers to convince them to sell me their property with seller financing terms for the properties I want to keep long term and add them to my rental portfolio. Before I go over the “12” negotiating tips that may help you convince a seller to give you seller financing terms you need to remember, most people today have been brainwashed to believe they want all of their money at closing.
First of all, I truly believe most investors who are unsuccessful convincing sellers to give them seller financing terms go into every negotiation already convinced and believing the seller is going to say no to their offer before they make it. I also believe they feel they just don’t have enough information or know what to say to present this type of offer. You should always give the sellers an offer that may be better for the seller than if they received all cash for their property.
It’s time to start thinking like an investor and no longer like a beginner. You should realize if the seller's live in the property they are selling as their primary residence, in most cases they won’t have any capital gains taxes to pay. This is because IRS section 121, states that if the sellers have lived in the property they are selling any two of the past five years as their primary residence, a single owner can take up to $250,000 of their gain (profit) tax free. If more than one person is the owner of a property and has lived in it at least two of the past five years, both of the owners can take up to $250,000 of their gain (profit) tax free. When the sellers live in the property as their primary residence I personally have many times found this to be a problem getting them to give me seller financing terms unless they have a specific reason why they prefer getting monthly payments over time. This is because they simply won't get killed paying high capital gain taxes.
Next month I will continue with the second part to this article. I am going to share with you “12” of the things I say to sellers to convince them to give me seller financing terms. These things I say have worked well for me over the years.
Until next month, be sure to listen to all of my podcasts found on my website. My podcasts are called the Real Deal Real Estate Podcasts. I put out a new podcast every Friday. Also explore my website for all of your real estate education needs.
Until then, Happy Investing