What I’d like to do is purchase a single family home using seller financing with 10% down, and then turn around and sell to another buyer using the same method where I carry the note.
For instance I purchase a $100,000 single family home with $10,000 down to the seller. The seller then carries the note for let’s say 10 years at 7%. I then turn around and sell the home for $110,000 with a smaller percentage down for 25 years at 10%.
Is this legal and/or common? Anything I should watch out for?
For sure it is legal. Try to make your money buying the house. Find a preforeclosure or something that is below market around 80% of the retail value or less.
Of course the obvious thing to watch out for is buying the place and not being able to find a buyer. Several months of payments to the seller can eat up $10,000 profit pretty fast. You should try to find a $100,000 and get it for $80,000 and sell it for $100,000.
Also if the buyer stops making payments you will have to hire someone to foreclose and here again payments will be missed plus fixup costs to resell.
All the books and articles I have read do not mention these pitfalls except the tapes I got from Tim Randle. This is pretty much his reflections on the buy and lease purchase business. Buying at market value and then trying to resell at an inflated value is a whole lot harder to do. You can do a lot more deals that way and lose a lot more money faster.
Also try to pay as little downpayment as possible to the seller and get as much as you can from the buyer. You may even be able to do a nothing down deal or even make some cash up front.
About all I know to help you with for now. Hope it helps and works for you.