Strategy Seller Financing

Unlock Deals Everyone Else Misses: The Ultimate Guide to Seller Financing & Lease Options

Brought to you by Brian Gibbons | www.REISkills.com

Training Module: Creative Financing Mastery

Introduction: It’s Not About Price, It’s About TERMS

Forget competing with every other investor for the cheapest price. The most powerful deals are found not in the discount, but in the creative financing terms. This training will teach you how to control properties, generate cash flow, and build wealth by solving sellers’ problems with flexible, “no-qualify” financing solutions.

Chapter 1: The Foundation of Seller Financing

What is Seller Financing?
Seller financing is any deal where the seller provides the loan, or the terms of purchase, to the buyer. The focus shifts from getting the lowest price to crafting win-win payment terms.

  • The Core Objective: Create “No-Qualify Financing” for yourself, which you can then use or pass on to your end-buyer.

  • The Key Requirement: One-on-One Negotiation. This is a direct-to-seller game, requiring empathy and problem-solving skills.

Why Would a Seller Do This?
The #1 reason: Debt Relief.
A seller who can’t make their mortgage payment isn’t thinking about maximizing price; they’re thinking about stopping the bleeding. Taking over their payment is often more appealing than a lowball cash offer.

The Arsenal of Techniques:

  1. “Subject To”: Take title subject to the existing mortgage. You make the payments; the loan stays in the seller’s name.

  2. Seller Carryback Mortgage: The seller acts as the bank, holding a new mortgage for you.

  3. Agreement for Deed (Land Contract): You get possession and equity, but the seller holds the title until the contract is paid.

  4. Lease Option: You lease the property with an option to buy it later at a pre-set price.

  5. Straight Option: You pay for the right to buy later, but you don’t necessarily occupy the property.

Chapter 2: Deep Dive – The “Subject To” Strategy

How It Works: The seller signs a deed over to you. You start making payments on their existing loan. It’s that simple.

Why It’s Powerful: You control a property with little-to-no money down, without needing a bank loan.

Addressing the Big Fear: The Due-on-Sale Clause

  • The Reality: Lenders can call the loan due, but they rarely do if payments are made on time.

  • Your Protection (The Clauses): Your purchase agreement must include:

    • Seller acknowledges the due-on-sale clause exists.

    • Seller agrees not to notify the lender.

    • Seller agrees to hold you harmless if the loan is called.

  • The Ultimate Shield: The Land Trust. Have the seller deed the property into a trust. The Garn-St. Germain Act explicitly allows transfers into a trust without triggering the due-on-sale clause, providing privacy and asset protection.

Ideal Seller: Highly motivated, facing foreclosure, or desperate for debt relief.

Chapter 3: Deep Dive – The Lease Option Strategy (The Investor’s Swiss Army Knife)

A Lease Option is two contracts in one: a Lease Agreement (you pay rent) and an Option Agreement (you earn the right to buy later).

Part A: Using Lease Options to BUY

Your Goal: Control a property, lock in a price, and build a down payment—all without a bank.

Crafting the Win-Win Deal:

  • Purchase Price: Can be fixed, based on the future loan balance, or the balance plus a bonus to the seller.

  • Monthly Payment: Aim for the seller’s current mortgage payment.

  • The Secret Sauce: Rent Credits. A portion of your monthly rent is credited toward your future down payment. This is how you build your way to qualification.

  • Option Fee: A non-refundable fee for the right to buy. Negotiate to pay this in installments.

  • Term: Make it long enough (2+ years) to repair your credit or allow for appreciation.

Protecting Yourself When Buying:

  • Verify Title: Ensure the seller actually owns the property.

  • Control the Payments: Never trust the seller to pay the mortgage. Use a Collection Account Agreement to pay the lender directly.

  • Get on the Insurance: Use an Add Additionally Insured Letter to be named on the hazard insurance policy.

  • Shield from Liens: Have the seller place the property in a Land Trust to protect it from their personal judgments.

Part B: Using Lease Options to SELL (The “Sandwich” Lease Option)

Your Goal: Be the “middleman.” You control a property via a lease option from a motivated seller, then lease option it to a tenant-buyer for a profit.

Why It’s Brilliant:

  • Cash Flow: You collect more rent from your tenant-buyer than you pay to the original seller.

  • Large Upfront Fees: You collect a non-refundable option fee from your tenant-buyer.

  • No Repairs: Use a Purchase Option Repair Addendum to have the tenant-buyer handle cosmetic repairs in exchange for credit.

  • Multiple Exit Strategies: They buy, you profit. They don’t buy, you keep all the money and find a new buyer.

Structuring the Deal:

  • Use Two Agreements: A standard Lease Agreement and a separate Tenant’s Purchase Option. This simplifies eviction if needed.

  • The Sales Price: Avoid a fixed price. Use a formula like “Future Appraised Value” or “Appraised Value + $X” to capture appreciation.

  • The Option Fee: Collect this separately from the security deposit. Have the tenant-buyer write two checks to emphasize it’s non-refundable.

Chapter 4: Executing the Deal – From Finding Motivated Sellers to Qualifying Buyers

Finding Motivated Sellers: Target those with debt relief needs: pre-foreclosure, inherited properties, tired landlords.

Qualifying Your Tenant-Buyer:
This is critical. Your success depends on their ability to eventually get a loan.

  • Interview Them: Ask about their down payment, monthly budget, and credit history. Let them state numbers first.

  • Check Their Credit Story: Look for a fixable issue (e.g., a past medical collection) rather than a chronic problem (continual non-payment).

  • The FHA Loophole: After 12 months of on-time payments under a lease option, FHA guidelines allow that payment history to be used to help qualify for a mortgage on that specific property. This is a game-changer.

The Golden Rule: Never lease-option to another investor. You want an owner-occupant who will care for the property and be motivated to buy.

Key Takeaways & Your Action Plan

Strategy Best For… Key Benefit
“Subject To” Acquiring properties with existing low-rate mortgages. Control with $0 down.
Lease Option (Buying) Solving your own financing problems. Build credit & down payment while locking in a price.
Sandwich Lease Option Generating massive cash flow and upfront profits. Making money without using your own credit or money.

  1. Shift Your Mindset: Stop looking for the cheapest house and start looking for the most motivated seller.

  2. Master the Documents: Your contract clauses are your armor. Use attorney-reviewed, state-specific documents.

  3. Protect Yourself: Always use a land trust for “Subject To” deals and control the mortgage payments when you don’t hold title.

  4. Build Your Buyer List: Your exit strategy for any deal is a qualified tenant-buyer. Start building that list today.

Ready to Implement? Get the Tools You Need at REISkills.com

This strategy is built on a foundation of legally sound documents and precise execution. Don’t risk your investments with generic forms.

Visit www.REISkills.com today to access our complete library of resources, including:

  • State-Specific Agreement Templates (Lease Option, Subject To, Land Trust)

  • Comprehensive Video Training on structuring and negotiating these deals.

  • Calculators & Checklists to ensure you never miss a step.

Stop leaving money on the table. Start creating deals out of thin air.

www.REISkills.com

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