Episode 12

12 - Benefits of Vendor Take-Back Mortgages in Real Estate Investing

Episode Summary

In this episode of Get Real Wealthy Season 2, Quentin talks about vendor take-back mortgages.

A vendor take-back mortgage is when you have financing that comes from the seller. When you have financing that comes from the seller it's usually because the seller has paid off the existing mortgage on the property and it's owned free and clear or they have enough equity in the properties that they could offer you a mortgage in the second position in order to lower your down payment on the property. Vendor financing or seller financing can help you to increase your ROI and also make a deal make sense.

Oftentimes you're including terms in your purchase and sale agreement that outline that the seller is going to carry back the first mortgage or a second mortgage on the property. Your lawyer outlines those terms and can set up a mortgage for you and sometimes people make it out that it's some complex thing and it really isn't. Oftentimes, it's possible to even cover closing and land transfer costs into your seller financing. It just depends on how you negotiate that in your purchase and sale agreement.

There are a lot of different and creative ways to do it. You can take possession of it through the mortgage, you could use a joint venture agreement in order to help you to use the existing financing on a property, and then once the work is done, flip that to either yourself or through a sale to the third party. Usually, it's just what you negotiate with the seller from a terms perspective.

In conclusion, there are lots of benefits for vendor take-backs or seller financing for the buyer and the seller. And it's a great tool for you to include in your toolbox for being in real estate investing. 

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About the Podcast

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About your host

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Quentin DSouza

Quentin D’Souza is a multiple award winning Real Estate Investor, and a trusted authority on real estate investing. He is an Ontario Certified Teacher and holds two university degrees, which includes a Master’s in Education. Quentin has appeared on local and national television and radio, interviewed in national publications, and has been a keynote speaker to large audiences of real estate investors. He owns a real estate portfolio in excess of $80 million dollars of assets under management across Canada and the US and transacted on 80+ properties since 2004. Quentin is the author of several books available on Amazon. He is also mentors real estate investors as the Chief Education Officer of the Education for Canadian Real Estate Investors and Durham Real Estate Investors Club.