Let's look at a few examples to see if it makes sense for you to devote the time and to learn this business.

Example I - Complete Seller Financing

Seller calls you with a house worth $150,000 in good condition. He's asking $145,000 has no loan and after prescreening you find he would be willing to owner finance with a 10% down payment.

Asking
$150,000 Value
$145,000 Asking Price
$ 14, 500 Asking Down
$130,500 Mortgage to seller at a requested rate of 9% for 30 years with a 10 year balloon

Your Offer
$140,000 Price
$ 5,000 Down
$135,000 -7%, 30 years, 10 year ballon, payments of $898.16, with the first one due in 3 months, no due on sale clause

You Sell
$160,000 Sales Price
$ 20,000 Down From Buyer
$140,000 Land contract to you at 10% for 30 years with a 10 year balloon. Payments to you of $1,228.60

Results

1. $15,000 profit on down payment ($20,000 from buyer less $5,000 to seller).
2. $330.44 per month on payment spread ($1,228.60 incoming less $898.16 outgoing
3. $5,000 minimum on back ent ($140,000 owed you less $135,000 you owe seller. This profit increases each month because the incoming debt pays off slower than the outgoing due to the difference in interest rates.
4. ? discount when you get ready to pay off the seller due to your buyer refinancing or selling.

Example II - Low Equity Loan Take Over

Seller calls you with a house worth $125,000 in good condition. The loan balance is $118,000 wit a $953 payment, which includes taxes and insurance. He just completed a heated divorce and is ready to abandon the house if someone doesn't offer him a solution. You learn he is one payment behind and his ex-wife deeded him the house.

Asking
$118,000 Loan Balance
$ 953 Payment
$ 1,000 Moving Money

Your Offer
$118,000 Take over loan subject to
$ 953 Payment to be made when and if you find buyer
$ 1,000 Moving money if he leaves appliances

You Sell
$135,000 Sales Price
$ 17,000 Down Payment
$ 118,000 Take over loan with no qualifying

Results
$15,047 Profit from down payment in a few days

In this example you have no monthly spread or back end profit. But as you can see it's worth your time to get involved for a few days and create a solution.

This type of deal is the most common and is very easy to find.

Example III - Partial Seller Financing

Seller calls you with a house in good condition worth $175,000. There is a no qualifying loan for $82,000 with a payment of $855.20 per month, including taxes and insurance. The seller is asking $175,000 cash for the house. Upon questioning, you learn she would consider carrying a second for her equity if she gets a $15,000 down payment.

Asking
$175,000
$ 15, 000 Down
$ 82,000 Assume Loan
$ 78,000 2nd at 9% for 15 years

Your Offer
$160,000 Purchase Price
$ 10,000 Down Payment
$ 82,000 Assume non qualifying loan payment of $855.20
$ 68,000 2nd mortgage to seller at 6% for 30 years with 10 year balloon - Payment $407.69
Total outgoing payment $1,262.89 PITI

You Sell
$185,000 Sales Price
$ 20,000 Down Payment
$165,000 Land contract, 9.9% for 30 years with a 10 year balloon - Payment $1,628.52 PITI

Results

1. $10,000 instant profit from down payment spread
2. $365.63 per month profit from the payment spread
3. $15,000 when your buyer pays off the loan to you
4. ? large discount possibility