How Seller Financing Works For Real Estate

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How Seller Financing Works For Real Estate

The easiest way that I can think of to explain how seller financing works in real estate is to show you an example of a transaction that I did. In this example, we have a 182 unit building and it is selling for $1.8 million.

What the video to see how I structured the seller financing for this transaction.

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Video Transcript

Hi, Jay Massey here, with the CashFlowDiary.com and in this video I’m going to explain “How seller financing works for real estate?” in two minutes or less.

So, easiest way that I can think of to explain how seller financing workes for real estate is to actually just show you an example of a transaction that I did.

Alright, so in this example we had a 182 unit building that was selling for approximately let’s just call at 1.8 million dollars.

Now when I looked in my bank again I was like you know what I don’t have 1.8 million dollars, right now, this exact second.

So what we did is the following: we went to the seller, we negotiated.

Hey Mr. Seller here’s what we would like to do, what we would like to do with we’d like to give you 350 thousand dollars today and if it’s okay with you, what we’re going to do is we’re going to pay the rest of that 1.8 million but we need time to pay it.

So what I want you to do is on this 1.450 million I need you to carry a note secured by a trusted deed would just simply that fancy way of saying that I’m going to make your payments over time.

Now in this particular instance, what is the benefit? The benefit here is, we only had to come up with 350 thousand dollars to buy an asset that at 1.8 million, that’s a 182 unit building.

The benefit to him and that he was able to get rid of the asset in at least the management and still receive some passive income, which is something that had become important to him and specially becomes important individuals the older they get when they want to make sure they don’t outlive their money. So they can convert what is equity or piles of cash into streams of cash. With this allows you to buy more assets and allows them to have it nice sustainable stream of income.

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