March 8, 2017
Joe Fairless

How a Yogi Finds Seller Financing Deals


If you don’t have a w2 job or have reached your traditional loan limit, how do you fund your deals? While there are many creative lending options, from private money to hard money lenders, one attractive strategy is seller financing.

Jeremy Jones, who has been a multifamily investor since 2012, has done 7 seller financing deals. In our recent conversation, he explained the best ways to find seller financing leads and the types of properties that are the best seller financing candidates.

Seller Financing Lead Source #1 – Word of Mouth Referrals through Relationships

Jeremy’s found his largest seller financing deal, an 8-unit apartment, through a relationship. “A broker friend of mind and then a broker that he was introducing to me,” he explained, “we were all in the car driving around and he said ‘hey the people that own that apartment reached out to me. They may want to list it, and they may be willing to carry the note.’” The broker ended up listing the property. Jeremy put in an offer immediately and was awarded the deal.

Besides the 8-unit, Jeremy found three other seller financed deals through relationships. He said, “[I] found [deals] through word of mouth, like a wholesaler, someone that I met at a foreclosure auction, and a broker who knew I was looking for seller financing.”

How did Jeremy create these relationships? “You have natural opportunities to talk about what you’re doing when you start to invest and it plants seeds in the mind of others,” Jeremy described. “Sometimes ideas come to them and they say ‘oh Jeremy might be interested in this!’”

During conversations, especially with brokers, Jeremy will say “I’m looking for multiunit buy-and-hold properties with the possibility of seller financing.” That way, when an owner approaches a broker with a listing and mentions that they are open to seller financing, the broker can respond by saying, “oh I know a couple guys that do this and that’s kind of their business – seller financing – and they have a good track record.” With seller financing, Jeremy explained, “a lot of times, [the sellers] don’t want to just put [their property] on the open market and just take anybody because they want a buyer they feel is going to be able to improve the asset, make payments, and refinance successfully.” In other words, since they will still own the property, they don’t trust an inexperience investor to control it. But in Jeremy’s situation, since the broker has already given him the credibility and social proof, the seller will likely be more comfortable awarding the deal to Jeremy over a random investor they don’t know in the open market.

Related: The 4 Keys to Building Relationships via Social Media

Seller Financing Lead Source #2 – The MLS

Obviously, Jeremy had to build up relationships over time before it was a reliable source of leads. So when he first started searching for seller financed leads, he used the MLS. “I have a broker that I work with who has set up an automatic [MLS] search that sends me an email with all the properties that meet [my] criteria,” explained Jeremy. At first, his criteria was all multifamily properties in his county where the seller was accepting seller financing.

However, for Jeremy’s first two deals, he followed a different strategy. Jeremy said, when discussing his first two deals, “it was multifamily properties that had been on the market for a little while. We figured maybe they’d do seller financing because they’re tired of having this thing listed.” Even if the listing doesn’t directly say “we accept seller financing,” that doesn’t completely eliminate the possibility, especially in situations where the property has been listed for a long time.

For the properties Jeremy purchased on the MLS, he said, “either it said on the MLS that they would take seller financing or it didn’t say that but they’d been on the market for a little while and it was a value add opportunity where they had a low enough mortgage balance that we could do seller financing and give them a down payment big enough to cover their existing debt.”

One of the reasons why properties with extended time on the market are great seller financing candidates is because the seller is asking above market value. So when Jeremy finds a listing that is 30 to 45 days or more, he’ll reach out and say “hey your asking more than the market is willing to bear right now, but we’ll get close to that if you can give us seller financing, so that we can leverage more on the property. Here’s our plan for value add and here’s our track record. We’ll get you cashed out in a year of 18 months.”

Lie most investment strategies, this approach is a numbers game. “I’d say for every 10 that we ask,” Jeremy said, “maybe one says ‘maybe I’ll take seller financing.’ It’s not like we hit a lot, but if we can hit one or two a year, that’s a good growth rate for us.”

Related: Hassle Free Seller Financing Trick

Seller Financing Lead Source #3 – Property Won’t Qualify for a Bank Loan

For three of the properties Jeremy purchased using seller financing, the sellers didn’t have much of a choice but to accept seller financing because, for one reason or another, the property couldn’t qualify for a bank loan. These types of properties are the most ideal for the seller financing strategy.

For the 8-unit deal mentioned previously, Jeremy said, “it was an interesting one. The owners had completely paid it off. They were elderly, living in one of the units and only … one other unit was occupied. Six were empty because they just liked to have a quiet lifestyle. We got seller financing at a good price because we said ‘you can’t really finance it with a bank without showing income, so if you do seller financing with us for 18 months, we can get it healthy and then we will refinance.’ They really liked that.”

The owners of the first property Jeremy purchased with seller financing also couldn’t qualify for a bank loan. “The first one that we purchase had a buyer that was going to use a bank loan,” explained Jeremy. “The appraiser thought that the foundation needed work and that they wouldn’t loan on it until that work was done. It went back to active [on the MLS] and then I came in with the seller-financed offer. They thought ‘this is great because seller financing will go through and there’s no appraisal to block it. Then it’s these guys problem to fix the foundation and do their refinance next year.’”

Finally, Jeremy’s second seller-financed property was severely under-rented, relative to the market values, and wouldn’t qualify for a bank loan. Also, Jeremy said, “one of the units was empty and being used as just a laundry room. It was maybe earning less than half of what it could earn just by getting all the units functional and up to the market rent. If a buyer came in with a conventional offer, the bank would be seeing a very low income, so that’s why we said ‘well if you give us a year of seller financing, we will be able to refinance it the next year.’ They said yes.”


The best way to get leads for properties that are seller finance candidates is through word of mouth referrals and relationships. Since relationships take time to build and grow, the best place to start is on the MLS. A few properties on the MLS will state that the owner is willing to accept seller financing, but properties that have been listed for 30 days are also great candidates.

The type of properties that is likely to be seller finance candidates are properties that cannot qualify for bank loans. These are properties, for example, that has major maintenance issues, has high vacancy rates, or is severely under-rented.

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Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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