Purchasing a home can be very stressful.  Whether it is your first home purchase, or your tenth, you still might have reservations that lead to “analysis paralysis”, where you can’t make a decision.   

A friend of mine went through this just 24 hours before closing on her first home.  She called me and walked me through some of her concerns, which included:

• An overzealous HOA board. 
• The unknown state of the real estate market. 
• Some unapproved improvements to the interior of the home. 

She was very concerned about these potential issues, and about to walk away from the deal. 

So I walked her through a “Plan B” process, where we assumed the (unlikely) worst case scenario and then determined what she would do if any of those were to become reality. 

I like to use a “Plan B” process whenever I’m have concerns about making a major decision.  It allows me to assess the real risk of any given situation much easier, by looking at the solution you’d create in the event of a negative event.  

Here’s a hypothetical example of how it works: 

Concern 1: “I’m concerned that the HOA board could be overzealous, and make my living situation there untenable.” 

Worst Case Scenario:  A contentious relationship with the HOA board. 

Worst Case Solution(s):  Proactively befriend the board members, opening a dialogue.  Then run for a seat on the HOA board.  If that doesn’t work, hire an attorney to aggressively defend your rights. 

Concern 2: “I’m planning on using the profit from this home to fund some future obligations in 5-10 years.  What happens if the market shifts downwards?”.

Worst Case Scenario:  The local real estate market drops 20%. 

Worst Case Solution:  My friend is buying the property at a 20% discount to current market rates.  This allows her to better weather a downturn.  She could also alternatively rent the property (at a profit, based upon her calculations) until the real estate market recovers.  Or delay her plans and continue to live in the home. 

Concern 3: “The home has some unapproved interior alterations, such as an interior closet.  What happens if I’m forced to remove these alterations?”

Worst Case Scenario: The cost to remove these would be $1,500. 

Worst Case Solution:  Pay the $1,500. 

By looking at the (realistic) worst case scenario, you’re able to understand the real risk of any given situation – and then proactively come up with solutions to those risks.  When you buy a home for $100,000, your realistic risk isn’t $100,000.   It’s either :

• the mortgage cost for 10 years, because the typical real estate market cycle lasts roughly 10 years, and you just need to cover the mortgage for that period of time until you can sell the property.    OR
• the amount of equity you could lose in a market downturn if you’re forced to sell at the bottom.   I like to estimate a 20% dip, but you can choose the number that you feel most comfortable with. 

Using a “Plan B” process can not only make it easier for you to make difficult decisions, but it also has the added benefit of training your brain to think about positive outcomes versus negative possibilities.  

Try it sometime and let me know how it works for you.

Lately I’ve been debating about selling my home in Vegas.  Spurred in part by my father (who is  by nature a fiscally cautious and reserved person), I’ve been trying to decide if now might be the time to sell the home and reinvest in another investment property. 

I started with a traditional options list – 

In the “it’s time to sell” column are:

• The pandemic and the exodus of California have created a housing shortage in the Las Vegas area.   The market is at an “all time high”. 
• I can sell the property and not incur capital gains taxes, qualifying under the “2 in 5 years” rule. 
• The potential elimination of the 1031 exchange

In the “it’s time to rent” column are:

• The potential profit, especially considering the fees incurred by the seller, doesn’t meet my objectives. 
• The difficulty in finding a replacement rental property.
• I have limited liability against the home. 

I then built a spreadsheet to run the numbers.  It includes the calculations if I sell the home:

From the sale price, subtract the purchase price, repair cost, commissions / fees, and if applicable the personal taxes you’ll pay on the profits.  What’s left is your net profit.  

It also includes the monthly and annual profit if I rent the home. 

From the average rental income, subtract the mortgage, the property taxes & the insurance (assuming they are not included in the mortgage payment), HOA fees, home warranty cost, average maintenance and ancillary costs.   

This will give you the net cash profit.  

Optionally, you can include the estimated earned equity you generate with each mortgage payment.  

With these numbers, I’m able to derive three base figures:

1. The number of years of renting it will take to generate the same amount as selling. 
2. The number of years of renting (including earned equity)  it will take to generate the same amount as selling. 
3. The number of “rental years” it will take to pay off the home loan. 

In my case,  those numbers were:

• 9 years to generate the same amount of income renting vs. selling. 
• 5 years 3 months to generate the same amount of income (including earned equity) renting vs. selling. 
• 20 years to pay off the loan with rental income.

I also looked at some of the more traditional calculations.  Dividing the annual rental income profit (cash only) by the initial downpayment is a 7.4% yield.  Including the equity increasing that to a 12.9% yield.   The same calculations based upon the current equity is 3% and 5% respectively.  

As a side note, for these calculations I did not include the cost to repair the property – as they would be the same if I sold the property or rented it.  I did , however, consider the cost the repair the property in consideration of the net profit earned if I sold the home.  

So what am I going to decide to do?   Well, honestly after the cost of repairing and selling the property, the profit upon sale isn’t tremendous.   Which also means that the potential benefit of avoiding capital gains on the sale of the home is minimal.  

I’m still working through the numbers, but I’ll let you know what I eventually decide.

You may have previously read stories by other real estate investors, who recount overcoming seemingly insurmountable odds to purchase their first rental property, which quickly becomes an amazingly lucrative investment.  This is not one of those stories. 

There really is no reason why I should be a real estate investor today.  In high school, I ignored sage advice from my grandfather who repeatedly extolled the values of real estate.  An extremely successful businessman in his own right, he often told me that his biggest mistake was selling his home each time he was transferred to a new city by his employer.  I can still hear him tell me “We may have had to have tightened our belts for the short term, but over time those houses would have become constant streams of income”.   And while he encouraged me to attend college, he also suggested that a career as a realtor would allow me to earn an income while learning about real estate firsthand.  Young and ignorant, I dismissed his advice as hyperbole from an older generation.  

Throughout college, I continued to rent rooms and apartments from other people.  It never occurred to me that I was helping them to pay their mortgages, and built equity in their real estate investments for their futures.   This trend went on even after I graduated college, until an unfortunate turn of events found me living back at home with my mother and my stepfather.  

Perhaps “unfortunate” is too strong of a word.  I went from working 10 hour a day, six days a week doing manual labor in a hot factory in Orange, California to being laid off and lounging in my parents pool, overlooking a golf course in Las Vegas.  I still remember my response when my former employer called to invite me back to work:  “I’m good, thanks though!”. 

But my days of summer tans and endless trips to the minibar were short lived.  It wasn’t long before I’d overstayed my welcome … and honestly if it wasn’t for the fact that I’d overstayed my welcome, I’d probably wouldn’t be where I am today.   If memory serves me correctly, my parent’s exact quote was “It’s time for you to go buy your own house”.   Perhaps they didn’t put it so nicely. 

So that’s what I did.  I don’t think that my parents were envisioning me buying one of their homes, but that’s what happened.  I purchased a small three bed two bath home about 3 miles from their house.  I put 25% down against the sale price of $120,000, covering the remaining balance with a 30 year mortgage at 7.25%.   

As I look back, I’m not sure how I made it through the home buying process – I was completely clueless.   Even though I bought the house from family I still somehow ended up paying a premium vs. the market. But despite that, and the fact that the house needed a tremendous amount of work, everything ended up working out.  

The house had tenants-in-place, whose lease needed to end before I could move in.  While that was happening, I was able to find my first of many roommates – allowing me to house hack long before I knew what that actually was.  At long last, someone else was helping me to pay my mortgage and build equity as opposed to the other way around.  Though I probably didn’t realize that at the time – I was just happy to have the company.  

Nearly 25 years later, I still own that home, among others.  The fact that I overpaid for it by about ten thousand dollars isn’t nearly as big a deal anymore.   It’s a rounding error in the grand scheme of things.  

More important to me is the realization that while they didn’t have an immediate impact, the lessons of my grandfather did eventually sink through.   I just wish that would have happened at a time when he was still here, so that I could thank him. 

I’ve been renting homes to tenants for over fifteen years.  During that time, I’ve learned – sometimes the hard way – that you can eliminate a lot of stress and hassle by what you don’t put in a rental property.  

This week, I thought that I’d share a list of the top things that I don’t put in rental homes:

1. A Pool or Spa
   
   Sure, pools and spas are very attractive to prospective tenants..  And you might be able get a few hundred dollars more rent for a rental property with a pool vs. one without one.  But the hidden costs will quickly eat up that extra profit.  Maintenance, even in warmer clients, is expensive.  Insurance is expensive.  Pools and spas are, you guessed it, expensive. 
   
   Better to avoid the pool or spa, and just focus on offering a clean, well kept home.
   
   
2. Rigid Door Stops
   
   I saw a video about a year ago from YouTube personality Meet Kevin, where he touted the perception value of a rigid door stop over the common spring type.  And I cannot argue with him about their appearance.  They certainly are prettier … I even have them in my personal home.  
   
   But the rigid doorstop has one enemy.   The vacuum cleaner.  Sure enough, your tenant is going to hit them with the vacuum.  Over time, they’ll come out of the baseboards – forcing you to replace not only the doorstop but the baseboard too.  
   
   A better option is to go with a high end spring door stop, or a doorstop affixed to the door hinge. 
   
3. Over Toilet Cabinetry
   
   These are a recipe for disaster.  Sure, they offer additional space, especially in smaller bathrooms.  But they’re just begging for someone to knock something into the toilet causing a potential major clog. 
   
   You might think to yourself “Scott, this isn’t my problem.  The tenant will just have to fix it.”  The reality is that regardless who fixes the problem, you’ll get a call from a tenant hoping that you’ll offer to fix it at no cost. 
   
   Why risk it.  Just don’t install it.
   
   
4. Dog Doors
   
   I love pets.  But dog doors in rental properties are the worst.  First, they are always dirty and never age well.  Second, they limit your home to always being a rental for pet owners.  People who don’t own dog, let alone other pets like indoor cats, typically don’t like dog doors.
   
5. Real hardwood floors
   
   And the final item on my list is real hardwood floors.  Unless the rental is older, and they add to the aesthetic of the building, I avoid real hardwood floors at all cost.  The expense and upkeep just don’t make economic sense. 
   
   It is far better to go with a nice engineered floor, which will wear much better over time.
   
   

That’s my list of things that I never put in rental homes.  I’m interested in your thoughts.  What’s on your list?

The demand for quality healthcare is steadily increasing.  Now more than ever, communities need qualified health practitioners.  Many hospitals have turned to “Traveling Nurses”, health practitioners like RNs and physical therapists who rotate from hospital to hospital to serve short term needs.  

This represents an opportunity for landlords, and carries many benefits.  Traveling nurses stay longer than the typical short term renter, but shorter than a standard annual leaser.  Their travel is paid for by the hospital, in the form of a sizable stipend.  And they are typically favorable tenants / guests, as they spend most of their time either working long shifts or recovering from those long shifts. 

I recently had the opportunity to speak with a recruiter who places traveling nurses in hospitals and coordinates their housing needs.  She shared with me some interesting insights which I thought you might find valuable too. 

MONEY

The weekly housing stipend a traveling nurse receives can vary, based upon vocation and the location.  Typically RN’s receive $600 a week for housing (this is in addition to their normal pay, and potentially food stipends as well).  Certain occupations, like physical therapists, will earn a lower stipend.  Since the traveling nurse gets to keep whatever they do not spend on housing, most are price conscious.   They may also have preconceived notions of reasonable housing rates if they are from an area that enjoys a lower cost of living.  

One comment I found particularly interesting was that most traveling nurses don’t have enough money for a large down payment.  As such, landlords may need to be flexible in terms of their required up front commitment. 

ROOMMATES

The number of traveling nurses who are willing to share a space with another person versus those who want their own space is split evenly.  With that said, most all of them want at least their own bathroom.  Many family oriented traveling nurses will travel with their family, and as such want their own space – normally a single family home with enough rooms for each person in the household versus an apartment. 

AMENITIES 

Since they are working long hours, traveling nurses appreciate amenities that save them time or money.  One of the most popular amenities is a weekly maid service.   This isn’t a requirement, but it is a nice bonus which helps differentiate your property from others. 

PARKING

Most traveling nurses have their own vehicles, and consequently prefer housing that includes parking.  The obvious exception to this is if the host location is in a highly urban area where everything is walkable – like New York City for example. 

DURATION

While most employment contracts are 13 weeks, traveling nurses look for weekly or monthly housing.  They avoid housing with long term commitments.  

ADVERTISING 

The most popular sites where traveling nurses look for housing are Furnished Finder, VRBO, and AirBNB.  

Renting to traveling nursing can be very lucrative.  Hopefully you’ve found the insight I’ve provided helpful. 

I was recently approached by two friends (let’s call them Celeste and Mary) for some advice on buying a home, and I found the situation interesting enough that I wanted to share it with you.  

Celeste and Mary are sisters.   Now in their 30’s, they want to find a way to give back to their mother Gloria, who is closing in on her 70th birthday and rents a room in a home.  Gloria lives primarily off of her social security benefits and has never owned a home.  

The three ladies are wondering if they contribute jointly, could they purchase a home with a low enough monthly payment that Gloria could afford to pay the mortgage.  Gloria’s brother, a handyman, might move in to this new home as well, helping to offset the mortgage payments and help with repairs around the house.  

Here are some of the questions posed, and the advice that I shared.  Of course, your situation might be entirely different, but my feedback might be something you’d want to consider as well. 

What Should They Look For In A Property?

My recommendation is to look for a single family home, in need of a little fixing up.  A mobile home, in particular one where they do not own the land, wouldn’t be a good investment.  Typically the home itself depreciates, and the land appreciates.  A townhome is an option, but it would prevent them from converting a garage into an Accessory Dwelling Unit which could be rented for additional income.  

In my opinion, the best option would be a single family home with a detached garage, on a relatively large lot.  To keep her taxes down, she should aim for a home as inexpensive as possible, being mindful of the repair / upgrade costs.   With family and friends who are handy, she can fix up the home over time into something that might be very livable.  All work, when required, should be permitted by the city. 

I would look for a home in an up and coming part of town.  Since she is over the age of 65, I’d recommend a single story home.  

Who Should Purchase The Home?

Celeste, Mary, and Gloria think that they should all purchase the home together.  But I pointed out that when Gloria passes away (as we all will do), that the property might be subject to a step up in property taxes as the title transfers from Celeste, Mary, and Gloria to just Celeste and Mary.   Celeste and Mary are Gloria’s only children, and as such the likely beneficiaries in the event of Gloria’s passing. 

A better option would be for Celeste and Mary to purchase the home, and then rent it back to Gloria at a reduced rate.  In this scenario, Celeste and Mary should craft an investor agreement, and think about putting the home into an LLC to further protect their investment. 

Celeste and Mary will have the added benefit of maximizing the tax deductions and depreciation on the home, which is something that Gloria, with a limited income, wouldn’t be able to fully capitalize upon. 

How Much Of A Downpayment Should They Put Down? 

Their first inclination would be to put as much money down as possible to make the mortgage manageable given Gloria’s limited income. 

But given that mortgage rates are amazingly low, and as first time home owners they qualify for very low rates, I recommend that they only put down 20% towards a 30 year fixed mortgage.  This will help them avoid PMI, and allow them to maximize the buying power of their money.  

There are a lot of things to consider when buying a home – and certainly Celeste, Mary, and Gloria will have more questions.  But I found the exercise exciting, especially because it allowed me to test my real estate investment deal analysis skills against a real life scenario.   Who knows, I might just end up purchasing a home as well ! 

Several months ago, on one of the hottest days of the summer in Las Vegas, Nevada, one of my tenants phoned to tell me that one of the air conditioning units went out in the house. 

It took me one week of arguing with American Home Shield, the home warranty company with whom I had a policy for the house, to get them to fix the problem which was covered by their policy.  My experience might be helpful to anyone else who has the same problem getting American Home Shield to respond promptly. 

The Home Warranty

What is a home warranty?  It’s an ancillary policy that you can purchase for a home, offering extended coverage on items that your normal insurance policy doesn’t cover.  While I used to get these policies to cover the forced air heater and the air conditioner (HVAC) in the home, they cover other items inside the home (such as the appliances, ceiling fans, etc) as well.  The policies usually run between $350-$900 per year depending on what you have covered.  There is typically a call out fee for each incident which ranges from $0 to $125, depending on your policy.  Most home warranty policies do not cover normal wear and tear or misuse (one real life example is a washing machine that broke because it was consistently overloaded).  

As a landlord, I would often buy a home warranty to cover the unexpected issues which may arise with my rentals (refer to my previous post on this topic:  How I Simplify Being A Landlord http://scottgordon.com/2020/08/14/how-i-simplify-being-a-landlord/).  

The Process

The process for submitting a home warranty claim is fairly straightforward.   

1. You simply call their 800 number or go online to their website.
2. Provide your policy number.
3. Tell them the item which is broken.
4. Pre-pay the call out fee, if any, with a credit or debit card. 
5. The home warranty will assign a third party service technician, based upon the problem you’re having, the location of your home, and the availability of the technician.
6. You’ll receive a confirmation email with the third party service technician’s contact information.   This confirmation email usually also includes a phone number for the home warranty company as well, allowing you to check the status of the order (which you can also do online). 
7. The third party service technician will contact you to schedule an appointment.  They usually provide a four hour time frame in which they’ll arrive. 
8. The third party service technician will evaluate the issue, determine the problem, and if the problem is covered under the home warranty. 
9. If parts are required to do the repair (for example, an air conditioner compressor), the third party service technician will contact the home warranty company to order the parts.   
10. With the proper approvals and the parts in hand, the third party service technician will schedule another appointment to repair the problem.
    
    

The Problem With The Process

In my experience, the problems with the process typically happen in steps 7 and 9 above. 

In Step 7, you may learn that the third party service technician will deprioritize service requests that originate from a home warranty company like American Home Shield.  In one recent incident, an air conditioner at one of my rentals went out at 7PM on a Sunday.  Even though I was able to contact the third party service provider (using the phone number in the confirmation email, in Step 6 above) at 9:30 PM, I was told that all home warranty requests had to wait until the following morning.   The third party service technician only took non-warranty requests after hours.  

In Step 9, you may learn that the home warranty company routes all purchasing through a central purchasing team.  In the case of the air conditioner problem, the third party service technician wouldn’t (or couldn’t) order the part directly; it had to come through the home warranty company.  Even though the part was available at the parts supplier, the third party service technician couldn’t get it without a PO number from the home warranty company.  I even offered to guarantee the purchase with a credit card, thinking that they could get the part now and if for some reason the home warranty company didn’t send the PO number that they could charge my credit card.  No dice.  I asked how much it would cost to do the work outside of the home warranty company, but the third party service provider would only offer to replace the entire air conditioner (estimated cost:  $3,000).   There is no creative way around this bottleneck; your job will not move forward without the PO number from the home warranty company.

How I Got American Home Shield To Respond 

It was late Friday afternoon, almost six days since I’d submitted the original request on the previous Sunday.  Each day that week (multiple times each day) I’d called the American Home Shield phone number provided in the confirmation email.  Each time I was routed to an overseas call center, where they answered, asked for the home address, then put me on hold for 3-5 minutes to “look up the account information”.  The result was the same each time – “I’ll put in a response to escalate, sir”. 

Asking for a supervisor didn’t produce any results.  Advising them that I was in violation of the Nevada statute (which I really wasn’t … as you’ll see below I’d already installed a temporary air conditioning window unit to replace the broken unit) which requires a landlord to fix an air conditioner within 48 hours if the temperature is above 90 or so degrees didn’t speed the process either.

The only thing that worked was this: 

1. Instead of calling the number provided in the confirmation email, I phoned the sales number on the American Home Shiled website, and spoke with a US based sales person. 
2. I plead my case, advising him that based upon their delays I was in violation of at least one Nevada statute.   I also told him that my tenant was elderly with health issues (a small but necessary fib). 
3. I reminded the sales person that I held several home warranty policies with American Home Shield, and while I didn’t blame the sales person (it wasn’t his fault, of course)  if I didn’t get a resolution immediately I would start cancelling my policies. 

It was at this point he gave me the “secret number” to reach the American Home Shield parts approval purchasing team.   He said “Dial 1-800-251-1608.  When prompted, enter #4 then #2.  You may have to wait a while, but you’ll eventually get someone who can help.  Give them this Dispatch number ” and he rattled off a long alpha numeric reference code. 

I called the number, and waited one hour and fourteen minutes on hold.  I spoke with a friendly US based American Home Shield rep, explained my situation and provider her with the dispatch number.   Within 3 minutes she had the part approved.  Problem solved!

Other Things You Can Do When Your Home Warranty Company Won’t Respond 

When I look back on this incident, there are a few other things that I could have done to make it go smoother. 

1. Maintain Mission Critical Items
   I relied on the home warranty to fix any problems that might arise at the home.  But if I’m being completely honest with myself, I should have had the HVAC inspected and maintained annually.  This might have identified the problem before it became an urgent issue, inconveniencing my tenant.  Yes, the home warranty wouldn’t have covered the maintenance nor any pre-emptive repairs, but it would have saved me hours of sitting on the phone with American Home Shield and kept my tenants from being inconvenienced, … which is worth the extra cost. 
2. Have A Backup Plan
   Having a back up plan is very important – and sometimes it only comes from experience.  I was able to rent an air conditioning window unit to keep the home cool while I was sorting out this issue.  This is now part of my emergency checklist; if a tenant has an A/C issue I can get a temporary window unit installed ASAP.  
3. Be The Squeaky Wheel
   As I reflect on the issue, being a squeaky wheel helped solve this issue.  I kept escalating until I found the answer.   I never accepted “no”.   I used every option available to motivate American Home Shield to approve the part.  

I hope that this is helpful to you.  Now more than ever it seems that home warranty companies are over indexing on sales, and under indexing on customer service and support when you have a problem.  I recently (intentionally) let the American Home Shield home warranty on one of my properties lapse.  Immediately I started to receive phone calls and emails multiple times a day from the American Home Shield sales team, reminding me that the policy had lapsed and asking if I wanted to renew.  Where were these people a few months earlier when the air conditioning in that unit went out?   It is clear where their priorities lie. 

It’s no surprise that the real estate market is challenging for investors.  With prices at a long term high, finding deals has become increasingly more difficult.  While I am in no means a formal real estate advisor nor fiduciary (consult your own experts before you make any final decisions), I did want to share where I’m currently focused in case it might provide you with inspiration. 

I’ve long been a fan of investing where others are fleeing.  But I’m also a proponent of investing in areas you know well.  If I lived in a large urban city I would be looking at acquiring rental apartments … the same ones people are fleeing to buy / rent in suburban and rural areas.   So investing in New York, Chicago, or even Los Angeles (which arguably will recover more slowly than the previous two I mentioned) isn’t a viable option. 

I also don’t think that commercial real estate is at a “rock bottom” price point sufficient to warrant my attention.  In my opinion, we have a bit further lower to go before the day comes where I’m willing to put my feet in the water.  With that said, if I saw a nice laundromat or a storage unit I might be convinced to pick it up!

But there is one area that does have some near term upside, and is just unattractive enough to a mainstream real estate investor to catch my eye:  land. 

Land is the ugly duckling of real estate investing.  But acquired at the right price point, it represents a great hedge against inflation and potentially a lucrative long term investment.  As I explained in my previous post, Camp Hacking is just one way to make money from investment land.  Of course, just as with any real estate investment, you must buy carefully.  But as commercial real estate plummets and residential real estate skyrockets, vacant land offers (in my personal opinion) a great opportunity to take advantage of future growth. 

Again, this is simply my opinion.  Your research will help guide your own opinions. 

Happy investing!

Sneak Peak: I’ve been doing a lot of thinking about when I should say “enough is enough”. When I should pivot my focus from planting to harvesting, and enjoying the fruits of my labor (and investing). As I align these thoughts to concrete ideas, I’ll share them here. In the meantime, if you have any thoughts, reach out to me on social media. LinkedIn is usually preferable!

Selling financing, where the seller is in effect the bank loaning the buyer the money to purchase the property that the seller is selling, isn’t particularly common (especially in times like now, where the monetary policies have eased and interest rates are low).  But it does have its place and time, and knowing the pros and cons of seller financing can be helpful in your next real estate transaction. 

Let’s start with the cons of seller financing, as the list is short.  

1. As the seller of the property, you’re foregoing the immediate payment of funds which could be invested elsewhere at a higher interest rate. 
2. If the buyer fails to make payments, you (the seller) will be forced to foreclose on the property, which could be expensive.   This can be a lengthy process, during which you’ll need to pay for the insurance, taxes, and any HOA fees.  Then you’ll need to make the repairs to bring the property up to a condition where it can be resold.  
3. You could become subject to regulatory restrictions, such as those which prevent foreclosures during the current pandemic and require mortgage forbearance. 

If those potential downsides haven’t dissuaded you, let’s talk about the benefits of financing your next property sale.  

1. Since you’ve sold the property, you are no longer responsible for the costs of the home.  The new owner is responsible for the maintenance, taxes, insurance, HOA fees, etc. This leaves you potentially with a very high ROI. 
2. You can secure a downpayment against the loan, which helps mitigate the risks associated with future repairs and maintenance you might need to make should the property go into foreclosure. 
3. You might be able to sell your home at a premium, to a homeowner who otherwise might not be able to finance the home purchase. 
4. You can earn a premium interest rate.  In today’s market, I know real estate investors who are earning 7% to 15% on the outstanding balance of the loan. 
5. Seller financed loans are typically 5-10 years, which means that you’ll get your full balance sooner than a typical mortgage. 
6. You may be able to defer some if not all of the capital gains from the property sale over the term of the loan.  

So how do you know if seller financing is right for you?  Let the numbers answer that question.  If the downpayment and interest rate offer a better return than you can find elsewhere for the same risk, then it might be the right choice for you.  Of course, each situation is different … and everyone should consider consulting legal and financial advice before making a decision.   If you ultimately decide that seller financing is right for you, there are plenty of online resources to help you navigate the process of setting up and maintaining the loan. 

Thanks in large part to our current pandemic situation, there is a broad flight from living in urban areas to suburban and rural areas.  This has led to an increased demand for single family homes, exacerbated further by a decrease in housing supply as homeowners, leary to allow strangers in their homes, are reluctant to list their homes.  The end result is a sellers market; some may say a severe sellers market. 

All of this begs the question, how does a home buyer acquire a home (or homes) without simply succumbing to the sellers price?  Fortunately, there are a few things that one might do, some “tricks” you might say, to make the most of what some might say is a less than advantageous negotiating position. 

1. Align with a realtor from the best broker.
   As I’ve mentioned before, realtors wield immense power and influence.  One such power, in some areas, is the pocket listing.  By aligning with the best broker (as measured by the number of open and closed listing in the area where you’re looking to buy a home), you give yourself access to the greatest pool of pocket listings.  
   
   Pocket listings are a home listing that hasn’t hit the Multiple Listing Service (the “MLS”), the public listing of homes for sale. 
   
   In a seller’s market, having access to homes before they become openly available to the general public can be a tremendous advantage.  And aligning with the best broker is your ticket to that offering.
   
2. Join forces with the selling agent.
   In a traditional sale, the buyer and the seller’s real estate agent share the commission.   When a seller’s real estate agent bring a buyer, that agent potentially doubles their commission.
   
   By aligning with the seller’s real estate agent and having them represent you in the purchase, you instantly make your offer more attractive to someone who might arguably be the most influential person in any real estate transaction … the seller’s real estate agent.
    
3. Be open to being the back up offer.
   A real estate deal isn’t finalized until escrow closes.  And the journey between an accepted offer and the close of escrow is fraught with potential pitfalls.  In a seller’s market, being a backup offer is almost as powerful as being the primary offer. 
   
4. Take on someone else’s problem.
   Some of my most successful real estate deals have been when I’ve was willing to take on a problem that the seller didn’t want to address.  Deals like this have an added benefit of discouraging potential competitors from creating a price war. 
   
   
5. Be patient.
   Most importantly, be patient.  Clearly identify all of your criteria, and wait until they are met.  Once met, be ready to strike with determination and conviction.  Have your financing secured, and be prepared to utilize it.  No one ever made money by chasing the wrong deal.