What is Seller Finance? Creative Real Estate Explained #Finance

a lot of people know my famous F-150 store it’s literally I forget I got a lot of garages so a lot of people know my famous F-150 store it’s how people understand creative none;">Finance let’s take a look at what do we got in the garage what do we got what kind of Hardware we got over here this is probably the fifth or sixth F-150 that I’ve owned in my life well I haven’t used this in a while this whiteboard is crusty and Dusty bro I can tell

you that seller Finance and creative Finance is one of these

things that just confuses people so what I want to do in this CashNews.co today guys is really get you to understand what creative Finance is and then we’re gonna do something really

fun on this little series so creative Finance is the process of buying anything and it’s not until I tell the same story about a thousand times that people actually start getting to

understand what the heck creative Finance is but I would tell you the most impactful story that I tell that I see the difference in people’s faces is all about an F-150 so let’s

talk about what seller Finance is or what creative none;">Finances so creative Finance it is the process of buying anything it’s not just about houses cars businesses it’s about buying anything without the use of

three things typically so I don’t have to use my Credit I have never used my Credit to buy the last hundreds and hundreds of houses I’ve bought don’t use Credit literally not using Credit okay um you’re not

using credentials when you buy with creative Finance what is a credential a credential is like my W-2 job proof of Income my bank statements how long I’ve been at my

job my job history those types of things those are credentials I have not had anybody ask me um when I bought that sub 2 Kia when I bought this sub 2 house when I bought sub to apartment buildings it does not matter nobody’s ever asked me for my Credit or my credentials zero

zero zero zero I’ve gotten none of that requested in fact when I bought this house with creative Finance the day we closed escrow or finalized the transaction and I became the owner I

had like 700 bucks in my account and I was like good thing they didn’t check my bank account because I didn’t have any money today to even buy anything and then the third thing you rarely use is cash and what’s cool about this is in Creative

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance if you do need to use cash you can actually use somebody else’s like your uncles or your cousins or whatever when I go buy a house and I go down to Wells Fargo Chase Bank of America whatever and I go apply for a

Loan are they going to let me borrow money for my down payment absolutely not but in Creative Finance if I don’t have cash I can go borrow money from a private money

lender and my private money lender nobody cares where the down payment comes from on a creative Finance transaction and so it makes it incredibly easy because there’s no require for

Credit there’s no requirement for credentials and there’s very little if any requirement for cash so that’s it in a nutshell so let’s get a little bit deeper this is one of my most famous stories of all time I’ve got a deal you guys can actually pull

up the address I don’t know if YouTube will like this or not are we not allowed to talk about addresses on here okay I’m gonna say it anyway and you can you can bleep me out so right here in Phoenix Arizona I live up here in Mesa and then you’ve got this little house down there in

Lower East Mesa okay let’s just call the house 78th Place so I get a wholesaler calls me up and this wholesaler calls me up and they say hey Pace I’ve got a seller that has a property on 78th Place named Susan and she has a property with tenants inside of it that she wants to sell

unfortunately Susan is saying she wants 110 000 for this property and Zillow is saying that it is worth only one hundred thousand dollars well most people would look at that and go that doesn’t make sense why would I pay ten thousand dollars over like most investors called wholesalers these

guys are typically looking for about 60 to 70 percent of the total Zillow number they’re going to come and go I wouldn’t pay anything over 60 or 70 percent that’s kind of like the rule of thumb some of them are looking for 50 right so they’ll come to Susan and they’ll

offer her fifty thousand dollars they’ll offer her forty thousand dollars sixty thousand dollars and they’ll sit there and negotiate with her over and over and the wholesaler is going to get her under contract let’s say for 50 Grand and then that wholesaler is going to sell that

off to um a fix and flipper for sixty thousand giving the wholesaler a ten thousand dollar Profit right that’s how wholesale Works in a nutshell well here’s the problem all these people that are sitting there offering money to Susan Susan says there’s no way

I’m selling this property to you for anything lower than a hundred and ten thousand dollars don’t waste my time with anything lower than a hundred and ten thousand dollars most people know I’m the creative #1a73e8; text-decoration: none;">Finance guy so Tom calls me up and says hey Pace would you be willing to go and meet Susan at the property and see if you can negotiate her from 110 down to fifty thousand dollars wholesaling is way harder than creative

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance because in Creative Finance the the main goal in a talking to a seller the main goal is getting a number that

both of you can agree on the problem with when you’re wholesaling you got to get Susan under contract at 50 cents on the dollar of what her property’s worth in Creative Finance I

can actually pay exactly what she wants Tom calls me and says Pace you want to work your magic with Susan and see what she can you know what she’ll sell the property to for me I go yeah of course so what ends up happening is I go over to the property and I end up having a great conversation

with Susan her motivation in selling was I want to move around the country in an RV and I want to travel around and I want to take some of this money and I want to basically utilize it for the next 10 years and travel around the country and I go okay so she doesn’t actually need the money

right now she just needs the money incrementally ding ding ding seller Finance so I go to Susan and I said hey Susan I imagine all of these people like Tom and other

investors are probably giving you fifty thousand sixty thousand dollar offers is that correct she says yeah how’d you know that and I go because if I was going to pay cash that’s what I would pay too I would pay 50 60 cents on the dollar and she goes well what do you mean if you if you

are going to pay cash what other way would you pay and I said I would pay you in terms and she looks at me like this she goes uh what I don’t know what terms means right and I do I say the word terms on purpose to kind of get their head to go what’d you say so what I told uh Susan as I

said look Susan forget about Tom okay this is about me and you you’re looking for a hundred and ten thousand dollars that’s what I know and I would be willing this is the Line This is How I convert people from a cash conversation to a creative conversation so I go to Susan I go Susan I

would be willing to come up to your number if you would be willing to give me terms there we go there’s that word terms again she had no idea what the heck that meant and so what did I do she says to me she goes what’s terms I go well let me tell you a story about an F-150 I then went

to tell Susan this story and I used the story the F-150 story to tie into how I’m going to buy her house I started nuancing and I said well Susan here’s the thing I used to I used to own a construction company and I had this F-150 it was a blue not that you care but I want you to paint

it in your mind it’s a blue four-door and it hit 320 000 miles on that truck and I told you it’s a Ford F-150 not a Toyota Tacoma that can go a million miles it’s a Ford and it started having problems and so I decided Susan that I was going to sell this truck and I was going to

take that money whatever it is and reinvest it into another truck and she’s like okay what does this have to do with my house I go well Susan how did you come up with the price of your house the 110 and she says well I looked it up on Zillow I go okay great so if I go to sell a truck where do

I typically go what’s the Zillow for cars and she says oh Kelly Blue Book right kbb.com that’s where you go to find out the value of a car and I go okay just like you if I go to Kelly Blue Book and I go all right Kelly Blue Book says my truck is worth five thousand dollars and I go

Susan I’m crazy just like you I’m belligerent I want a specific price there’s no way I’m selling this truck for five thousand dollars so I’m crazy and I decide I’m gonna go list this on Craigslist I’m gonna add five grand on this because I’m crazy

just like you Susan she laughs right and I am going to go put this on Craigslist for ten thousand dollars just like you saw on Zillow that Zillow says this property was worth a hundred you went and put this on the market for 110. she goes yeah you’re right like I just know people are gonna

lowball me I wanted to protect myself a little bit and I go okay no problem why don’t we figure out how I can get you to your hundred and ten thousand dollar number just like I figured out how to sell my truck for exactly what I wanted I said so I go to Craigslist and I list my truck on

Craigslist for ten thousand dollars did I sell that truck Susan for ten thousand dollars she’s like um yes and I go no I didn’t I didn’t even get a phone call three months goes by okay three months goes by I don’t get a phone call a text I don’t even get somebody being

angry with with me and saying who the hell do you think you are trying to sell this truck for ten thousand dollars I just thought like literally nobody nobody reached out to me for three months so my wife comes into the story and my wife says hey this is Laura and she says hey sweetheart that truck

is in the driveway and every day I come home I gotta kind of navigate around it in the driveway is there any way you could get that truck like sold as fast as possible I’m like babe what the heck do you want me to do I I don’t think it’s worth five grand and if I put it on

Craigslist for five grand which is what Kelly Blue Book says it’s worth I’m just gonna get low bald and somebody’s gonna come in and say oh and all cash offer for three thousand dollars and I said Susan does that sound like what’s happening to you she says yes that’s

exactly what’s happened to me if I if I put it for a hundred which is what Zillow says it’s worth I would even get lower cash offers I go there you go so here’s what I figured out I’m sitting there with my wife and my wife stops and she says well aren’t you the

creative Finance guy and I go yeah and my wife says well why don’t you just sell it and take payments for it and I’m like okay yeah why didn’t I think of that so I literally

go back to Craigslist and I change one thing I literally change one thing I said I kept my price at ten thousand this is what I said I said will take payments Susan do you think I sold that truck for ten thousand dollars and she was like probably I go I actually sold that truck for twelve thousand

five hundred dollars and I found a gentleman named Jose who gave me a thousand dollars as a down payment and he owed me eleven thousand five hundred dollars which he made 350 dollar payments to me for the next four years when I actually received on this 12 Grand was fifteen thousand dollars plus on

a truck that Kelly Blue Book told me was only worth five thousand bucks and then all of a sudden Susan says I understand creative Finance so that is how I explain to people what is seller

Finance I own a truck that’s worth five grand but I sold it for twelve thousand five hundred because I was willing to give the person buying it from me the ability to

make payments to me over a period of time it’s the same thing with my camera guys okay if they want to go buy a an expensive camera or an expensive lens wouldn’t it make sense to go I don’t have five grand to buy that camera but if you let me make payments to you I can’t

afford it in fact I’d be willing to pay you six thousand dollars if you let me make payments that fit my budget that’s called seller Finance the seller is

financing you and allowing you to make payments so Susan goes holy crap why didn’t everybody I’m literally 65 years old why didn’t anybody ever explain this to me I go because nobody had an F-150 story to make you understand it will say to me well didn’t Jose overpay for the

property right didn’t he overpay for the truck why would he do that here’s the thing you need to understand the value of a property is never the purchase price the value of the property is based on what you can do with it and what Jose did with this fifteen thousand dollar truck that

was only worth five grand as Jose paid me 350 bucks a month and Jose went out into the field he was a painter and he made seven thousand dollars a month as a painter using this truck I look at Jose and I say you dramatically underpaid for my truck because you created value with that truck I

wasn’t willing to go create so I believe him paying 15 grand over time was actually underpriced so I went back to Susan and I said Susan this is why I’m not going to argue with you on your hundred and ten thousand dollar number you’ve got a hundred and ten thousand dollar price in

your mind everybody else is offering you fifty thousand dollars if I come up to that number will you give me the terms that make sense similar to what I gave the terms to Jose she says to me yes I will I love this I absolutely love this this is amazing this is what she asked me for she says I want

twenty thousand dollars as a down payment and I want eight percent interest and you can make payments to me and what do I say I say Susan you want your cake right you want your hundred and ten thousand dollars and you want to eat it too meaning you want big down payment and a large interest rate

where do I win in this scenario you got the highest purchase price I’m gonna take over your tenants you want a big massive down payment and you want a big massive interest rate I’m probably this is my this is where my line my other famous line came up was I said I’m probably not

your buyer and I step back I physically in the appointment I stepped back and I said I’m probably not your buyer and I put my hands up which is psychologically I’m withdrawing from her and she goes well what would make sense for you okay and I said well Susan here’s the thing I

can we agree that this your house is not worth 110 000 she says yes I go so you can agree I’m overpaying what anybody else is willing to pay she goes yes and I go so you’ve won right if you sell this to me for 110 Grand You’ve Won she goes yeah I go here’s what I want I want

principal only payments is why I never tell people zero percent interest I say principal only so when I make a payment to you it pays down okay I want principal only and I will I’m willing to give you ten thousand dollars down if you Susan pay for the closing costs at the title company and if

you let me this is where it gets really tricky pay attention to this if you let me pay you the ten thousand dollars over the course of six months I’ll give you five grand and six months later I’ll give you another five grand so check out what she did she agreed to these terms okay she

gave me a zero percent interest or principal only she paid for the closing cost so I’m into the deal no money I inherited tenants so there’s no money out of my pocket I didn’t have to renovate it still to this day those tenants are still in the property and what I had her do is

not only sell or Finance the hundred and ten thousand but she wanted a ten thousand dollar down payment I had her seller bold; color: #1a73e8; text-decoration: none;">Finance her down payment to me interesting so let’s tie this back into camera equipment so let’s say Jose or Eric you guys go out and you do a CashNews.co for somebody right let’s say you go I don’t have the

equipment for this you go down to Tempe camera you go down to somebody you go I I need to buy that equipment to go make money over here will you sell or Finance this equipment to me and they

go yes but we want a down payment and you go can you wait a week for my down payment and what you do is you take your equipment you go make CashNews.co content or photography for somebody you get a chunk of money you go here’s your down payment they let you use the camera equipment in order

to earn the down payment in order for them to give you the Loan does that make sense that’s what I did with Susan Susan let me go six months with these tenants I make a thousand dollars a month net Cash Flow every single month on these tenants so multiply

that by six months how much money do I have after six months six grand so in six months I earned six thousand dollars Cash Flow from the tenants and I paid five thousand of it to Susan six months later I did the same exact thing I paid her five thousand dollars this is a zero down

zero percent interest seller paid closing costs deal that I did because I taught somebody what seller Finance is by using an F-150 story you can do anything in Creative

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance okay as long as you can explain to somebody what the benefits are now how does this benefit Susan okay this benefits Susan because check this out how did I figure out my monthly payments

tour okay my monthly payments to her by the way are 375 dollars a month at zero percent interest why is it 375 dollars a month where did I come up with that number Eric do you know where I came up with that number that’s her remaining balance nope this is It’s so simple you’ll

never think of it the reason why she wanted to sell the property is because she wanted to travel the country in her RV guess how much the average amount of money she spends on her RV rental spot per month 375 bucks a month so I told her is it what if I made a payment to you of 375 dollars a month

every month that for the rest of your life you never have to worry about the RV rental expenses and so that’s what got Susan to give me 375 dollar payments on a property that currently is rented out for sixteen hundred and fifty dollars per month pretty powerful