Typical Owner Financing Terms (defined!)

Are you looking for a list of typical owner
financing terms? If so, I’m going to do you one better. I’m going to give you a big list of typical
owner financing terms, and then I’m going to show you how to put them to work, so you
can build your real estate portfolio without limits and without banks. If you’re really serious about your real estate
investing, by the way, click the subscribe button ,and ring the bell. Ring that notification bell, so you never
miss an episode. I post really cool stuff like this each and
every week. Alrighty? Let’s get started. This is Theriault media. Hi. I’m Matt Theriault, CEO of Epic Real Estate. If you’re looking for a list of your typical
owner financing terms, well, I’ve got them, and we’ll cover them first. If you’d like to see how to put them to work
for yourself, like I’ve shown thousands of my clients to do just that, I’ll show you
that too. Alrighty? Just a note. This is a rather advanced training that you
really won’t learn this way anywhere else. After we’re done here, if you want even more
help, I’ll show you how to get it. Sound good? All right. Okay. I’m going to give you a list of typical owner
financing terms, but understand this. The foundation of every deal lies within the
seller’s motivation to sell, meaning if the seller isn’t motivated, it’s going to be a
lot tougher to strike a deal using these owner financing terms. However, the greater the motivation, the more
likely they are to cooperate and the greater the deal that you can strike for yourself. If you’d like to see how we’re finding motivated
sellers like this for as little as a dollar a day, you can watch this right here. Just click this little link up here, and I’ll
take you to a video to show you how we’re doing that. Now, last thing before I give you these terms,
as a real estate investor, from this day moving forward, I want you to think like this. It would behoove you to adopt this philosophy. That is I buy houses in one of two ways, by
my price and the seller’s terms or the seller’s price and my terms. As long as I, as long as you, can control
one, I can always make a deal for myself. Most people, they understand the price, but
very few understand the terms. So, I wanna make it very simple just to begin. If I said I’ll pay you a fast nickel for that
house, nickel is the price. Fast is the term. Or I’ll give you a slow dime for the house. Dime as the price. Slow is the term. If that makes sense to you right there, let
me know by smashing the like button. Let me know that we’re off to a good start. That’s the philosophy. Now, the real world implementation looks like
this. The starting point is a fast cash offer, low
price, fast cash terms. This is pretty much the only thing your competition
understands, by the way. They are one trick ponies offering fast nickels
every single time. But what if the seller says no to the nickel
part? Most give up. But after you and I are done here, you’ll
know how to offer your terms in exchange for that higher price, so it’s still a deal for
you. You can snatch these deals right from your
competition. They’re the ones that they’re losing. The price and terms work in conjunction with
each other like this. The higher the price, the longer the term. The lower the price, the shorter the term. Now, typical owner financing terms. Here’s the list that you’ve been waiting for. We’ll make it simple and we’ll get progressively
more advanced. Payments. A payment is the trade of value from the party
to another, from one party to another to fulfill a legal obligation. Interest. This is a payment from a borrower to a lender
of an amount above repayment of the principle amount borrowed at a particular rate. Principle, a capital sum earning interest,
due as a debt. Credit, the provision of money, goods, or
services with the expectation of future payment. Down-payment, a part of the full price paid
at the time of purchase with the balance to be paid later. Balloon payment, a final payment that is much
larger than any earlier payment made on a debt. Moratorium, an authorized period of delay
in the performance of illegal obligation or the payment of a debt. Profit share payments to principals in a transaction
that depend on the profitability of the transaction. Option, a contract that offers the buyer the
right, but not the obligation, to buy a property at an agreed upon price during a certain period
of time or on a specific date. Lease, a contract by which one party conveys
property to another for specified time, usually in return for a periodic payment. Lease to own, a contract that combines elements
of a traditional lease agreement with an exclusive option to purchase. Carry back, when a seller acts as the bank
or lender and carries a mortgage on the subject property. Subject to, buying a home subject to the existing
mortgage, while title is transferred to a buyer, the existing mortgage stays in place,
where the buyer takes over the payments. Deferral, a postponement of an action or event,
like deferred interest, deferred profit, deferred down payment. So, there’s your list of typical owner financing
terms. There’s enough there to make you really dangerous. Now, as promised, let’s see what they look
like in practice. So, here we have a house. It’s valued at $100,000. The seller’s bottom line is 95,000. they’re not gonna take anything less than
that. It rents for $1,100 a month. To keep things simple, we’ll assume right
now that there is no mortgage on the house, nor does it need any repairs. We might start our offering at $60,000 cash. That’s our fast nickel scenario. The seller says no. So, we might offer a slow dime type scenario
of $70,000 to be paid as $7,000 down, $63,000 at 5% amortized over 30 years. The seller still wants a higher price, so
we ask for an even longer term. We then could offer something like $80,000
to be paid as $10,000 down, $70,000 at 4% interest only payments, balance due in 10
years. See how that’s working? Higher the price, longer the term. seller still says no to the price. So, we could offer $90,000 to be paid as $15,000
down, $75,000 divided by 150 equal monthly payments. Or if the seller still isn’t happy with that,
would you consider doing a deal like this and actually overpay for the house by offering
$120,000 paid as follows, 20,000 down $500 a month, six month moratorium on first payment,
and the remaining balance due in 15 years? Would you do that deal and overpay for it? Here’s why. If you lose control of the price, you can
really recover with the terms. Look at this. If you were to pay market value for this house
with traditional bank financing at a price of 100,000 bucks, that would typically look
like this 20% down, 30 year bank mortgage at 6%, and then over the life span of that
30 year mortgage, when you account for the interest, you actually pay 102,000, or excuse
me, $182,000 for it. So, in this last example, where we offered
120 for this $100,000 house to be paid as the 20,000 down, $500 a month, a six month
moratorium, with the remaining balance due in 15 years, it’s actually still much less
than you would have paid using traditional financing. You see, you only paid 120K for it, and you
had a much stronger cashflow along the way. Yes. You paid $120,000 for the a hundred thousand
dollar house. It’s a steal with these terms. Right? If you’re following along, and this isn’t
over your head, type in, “This is epic,” in the comments below. This is how we do it. When a seller says no to our fast nickel offer,
we offer them essentially three different types of slow dime offers using this three
option letter of intent. I put a link down below, if you’d like to
grab a free copy of it. While you check that out, let me introduce
you to Nathan. He’s a client of mine. He sent this video to me recently for our
last Epic Intensive, because he couldn’t be there in person. Check out what he did with this deal using
the three option letter of intent, using many of these owner financing terms that we just
went over. Listen for how many of them that you now recognize. If you haven’t done the math, I’ll do it for you. That’s a 96% cash on cash return. Your money invested would double every nine
months at that rate. How many of these types of deals would it
would it take for you to reach financial independence? Not many. Right? Now, if a house does have a mortgage on it,
no worries. You can still do this. Rather than crafting price and terms for the
entire house, you just take over the property, subject to the existing mortgage, and simply
present your price and terms offer on the equity spread that’s left in the property. If you’d like to get more help with creative
real estate investing and work together on your overall investing, there’s a link below
on exactly how to do that. If we’re moving way too fast, if this was
way too fast, and your head might still be a little spinning a little bit, especially
around the part that I just mentioned about taking over a property subject to the existing
mortgage, what I did is I pulled this step by step video out just for you. Click it, and you’re gonna learn how to buy
a property subject to the existing mortgage. If you know anyone that might find this video
useful, please share it with them. It would be a favor to me as well. Even more importantly, it’d be a favor to
them. So, I’ll see you next time. All right? Take care.

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