Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income

while creating wealth for the long term. And now here's your host, Marco Santorelli.

Hello, my friends, and welcome to another episode of Ask Marco,

where I answer your investing related questions.

Today's question comes from Alan and he says,

hi Marko, I have seen on the MLS a house for sale with owner financing.

I know houses on the MLS are listed at or near their max value and everyone says you make your money on the buy.

My question is would you pay full price for a house with owner financing if it meets the 1% rule and still makes some cash flow.

Also, do you have to tell the bank about this owner financing deal when trying to buy another property using conventional financing. Thanks Alan.

Thanks for your questions, Alan. So essentially your main question here is about buying an owner-finance

property. So let's break this down. So first of all, to your first comment, you don't always make money on the buy. I know a lot of people say that, but that comment is especially true for someone who is more of an active real estate investor or let's just call them a flipper or someone who buys fixes and then keeps the property because you obviously want to get the best price possible on the front end so you can budget for renovations and contingencies and hopefully some equity in there which is your forced equity, meaning the profit or the value that you build into the property.

If you can find a nice rent ready property or a turnkey rental or a property that is essentially a performing asset, meaning it's leased and generating income, and you can get it at a discount,

for whatever reason, great.

That's just a better deal

because you're not only getting the property you want

with positive cash flow, but you're getting some equity as a kicker on the front end

But you don't always make your money on the buy in fact if you look at most

Investments in prudent markets you will find that the appreciation and

equity growth in that property over time is really where you have your

greatest gains if you get that on the front end as a kicker,

that's fantastic. Call that icing on the cake or a bonus. But your wealth is created over time as the equity grows in your property. I could do an

episode on that alone but I just wanted to comment on that while you brought it up.

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