I started asking sellers if they would consider seller financing on the properties I was analyzing and was surprised to find that many of them were open to the idea. There are some tax advantages for them, as well as being a method to increase their profitability on the sale. Why should banks make all the money?
Most seller financed deals are usually 2 to 5 years with the buyer expected to find standard financing on the building by that time, or pay out the loan directly. Standard bank financing is easier after the owner has a track record with the property showing steady income and profitability. It also helps to establish your depositary accounts with the bank you intend on borrowing from. We are currently negotiating seller financing terms on 3 buildings, and will be basing our offers on those negotiations.
I'm just finishing up a trip to Cleveland and have found 3 great properties that are not on the market. 2 of them offer seller financing and the third is only $225K for a 19 unit building. A lot of people I have talked to feel they don't have the money to get started, but you can use the equity in your home to buy cash-flowing investment properties that will pay themselves off in less than 10 years, and provide for that extra income you want during your retirement. Better returns than your RRSP! If you are interested in returns of $40K or better on a $250K investment, call me now!
I'm off to finish up some due diligence on a great little 17 unit that includes 2 retail units. The building is a 20 Cap (it will pay itself off in 5 years), and the seller has offered some financing. I may take this one down myself, or with a partner. My only questions are on the condition of the roof and repair costs for some damages gutters, so I'm meeting a roofer there to inspect it.