How to Find Seller Financing Deals from Tired Landlords with Jason Coleman

Jason Coleman (00:00)
I ended up selling half her portfolio and buying 11 houses from her from a door knocking campaign from just face to face human connection to, Hey, after talking with this guy for a couple of weeks, had some coffee with him, met him at the house a couple of times. You never know where those and in that, again, the first deal was like,

Dylan Silver (00:06)
unbelievable.

Jason Coleman (00:17)
A simple seller finance, 5 % down deal. think back then it was like a $90,000 house. And then it turned into, whoa, you can buy a ton of real estate all at once, where she didn’t have the amount of cash in her bank account she wanted.

Dylan Silver (02:02)
Hey folks, welcome back to the show. Today’s guest, Jason Coleman, is a real estate investor based in the Triad area of North Carolina, including Greensboro, Winston-Salem, and High Point. He’s a full-time investor and operator with admin support focused on building a consistent and simple business. He’s purchased over 40 properties using seller financing in the last five years, which is his main strategy. He’s also a licensed agent and uses that as well to source his deals. Jason, thanks for taking the time today.

Jason Coleman (02:29)
Thanks for having me, Dylan.

Dylan Silver (02:30)
Now, when we talk seller financing, there’s a lot of interest and 40 plus properties is no small feat. How are you actually finding and structuring those deals?

Jason Coleman (02:40)
Yeah, so finances definitely my bread and butter. I specifically hunt for 60, 70, 80 year old tired landlords, right? They have enough money in their bank and they’re just looking for cash flow. If they sell their entire portfolio on the market, they pay big capital gains hit all at once. I can hedge that over time, pay them a decent interest rate. And really, I mean, have a lot of these deals. The majority of my seller finance deals are zero down, five percent down.

I if you structure this correctly, it’s very much a win-win for both the buyer and the seller. And I pay out a lot of money every month to individuals. And what I find is once you do it, the first time I did it, my mind was blown years ago. was like, wait, somebody let me buy this house with just 5 % worth of a down payment at 5 % interest or whatever it was. And then it really opened up the door to the next conversation, kind of get built that confidence to, right.

I can do this. already have a small track record and I find people that are in that situation, landlords that are just done with it, that have properties they own outright. They know other landlords that also own their properties outright and are just kind of looking for an exit cashflow strategy without dumping a wall in the market, doing that whole run around. You know, I can close a seller finance deal in a week and once they’re ready to go, it’s pretty easy if you do it correctly.

Dylan Silver (04:00)
What are those

initial conversations like? There’s a lot of interest in how to bridge that gap between someone who may be looking for a cash offer or someone who may just not be thinking of selling at this moment, but they hadn’t thought of seller financing. What are those initial conversations like?

Jason Coleman (05:05)
My favorite question to introduce seller financing, if they don’t already know, because a lot of landlords already know, is what are you going to do with the money? When you sell, what are you doing with the funds? Somebody that’s seven years old is not taking 100 grand, 300 grand, a half a million and dropping it into the stock market and watching it go up and down. They want something safe. At that point in your life, you’re typically going to put it in the money market, get in 2%. If you show up with, not to mention when they sell and they pay that

If I give a 200,000-hour property, if they sell it for 200,000, they’re paying 30, 40 grand in taxes. I can bulk that entire purchase price into a loan so they don’t have to lose with capital gains right away. Obviously, it gets hedged over time, but I can give them a 200,000-hour loan with them. They can capitalize on the entire market price of the property and get paid out at whatever the interest rate that we decide over time.

to structure the, I I always say, are you gonna do with the money? And they say, I don’t really know. I want something safe. want something secure. Most of the time they say, you know, I have enough cash. just, I’m just done with it. They haven’t kept up with market rents. They haven’t kept up, you know, the property. They’re probably, their systems aren’t as updated as mine. You know, being, I’m 38 years old, I’m all into the system side of things. And I’m happy to, again, once that track record, the first one’s the hardest, right? Then you just kind of realize,

And your eyes open up and you’re like, all right, well, I can provide value. There are lot of 60, 70, 80 year old landlords out there that just want a monthly check. There are a lot of them. So and then structuring those deals is I tell people that are interested in this. It’s always just kind of a it’s always just kind of a dance and negotiation with the seller. All right. I can give you a higher purchase price and a low interest rate or a lower purchase price and a higher interest rate. And I can show them on paper what this looks like every month. Right.

I mean, have some properties I’ve bought over what they’re worth on the market, but I have a 0 % extra trade with them. I’m happy to do that if my balloon payment down the road makes me way more than whole in a five-year period, right?

Dylan Silver (07:09)
There’s a lot of interest right now in folks from all arenas getting into seller financing, it seems. And so with that, there is a level of awareness that maybe wasn’t there beforehand, but the flip side is there’s more folks who are doing it who have less experience. What are some of the most common errors that you see folks making when they’re getting into seller financing?

Jason Coleman (07:24)
Yes.

Um, it’s always not running your numbers correctly, right? If something cool, no money down. That’s, that sounds great. But if your payment to the seller’s $1,500 a month and the house rents for 2000 a month, that not, not a good deal. Right. So I find, I mean, I find some people, I have some people send deals my way. They’re like, Hey, I want to do this with the seller. I’m like, you’re totally, you’re forgetting about their HELOC that you have to pay off. You’re forgetting all. There’s a bunch of stuff that

people don’t see under the surface, some buyers that are brand new to this, that you can, if you’re having decent conversations with sellers, honest, authentic conversations with sellers, I find they really just open up, tell you what’s going on. A seller that is interested in seller financing does not want to sell you a $200,000 property with a $1,500 a month mortgage payment that’s only going to run out for $1,800 a month. Like that’s, it’s just not, it’s not going to happen. Because the seller knows.

You’re not going to make this, you’re not going to be able to make this work long term. And they’re going to up having to foreclose the property. They don’t want to do that.

Dylan Silver (08:30)
You know, when you mentioned the margins there, what are you looking for as far as, you know, a margin between what your payment would be and then what it’s going to rent out for?

Jason Coleman (08:40)
So I typically look at what I feel very confident the market rents will be and if it’ll rent for $2,000 regardless, you know, I don’t say regardless of the rehab. Obviously, that’s a fact always a factor. If something I feel confident it can run out for $2,000 a month, I might try to stretch for $2,200 for a month on the market or whatever. But if I feel like it’s going to rent in 30 days, if I listed for $2,000 a month, I’m comfortable paying a principal and interest payment to the seller at half that.

That’s kind of a, that’s a quick roundabout number. Now, most of time it actually comes at an under half, but I tell, if I’m looking at a property, most of the time they haven’t kept up with market rents, they’re sitting there running it out for $1,500 a month. If I show up and I say, well, I could probably comfortably pay you between $900,000 a month, just principal and interest. And you never have to worry about this property again, right? You’re not getting the calls, the maintenance issues, the taxes, insurance. I take care of all that. I find if that right there peaks their interest,

then we can dive in deeper on what these terms actually look like. How far is the, how long is the amortization schedule? When’s the balloon payment? What’s interest look like? You know, what’s, what’s principal and interest combined look like? So, I mean, that’s really where I start. People that are really interested in this, the vast majority of my seller finance, I would actually say all of them have not kept up with market rents. So if you show up and they’re like, they’re probably netting, if they’re getting $1,500,

month right now, or to their current rents. They got taxes, insurance, they got maintenance or whatnot. They’re netting less than a thousand dollars a month right off the bat. So you can come in, zero down, 5 % down. Most of my deals are zero down. I mean, at least 30 of them at this point, over 30 are zero down deals where I can turn around and say, I’m going to bump up the rents. I’m very transparent with them, but they know that they’re netting less than a thousand dollars a month anyway, right now.

Dylan Silver (11:02)
What percentage of these places are free and clear versus have some type of debt on

Jason Coleman (11:02)
So, if you are.

the majority are free and clear. don’t mess, you if it’s something like a $200,000 property and they’ve got $20,000 loan balance on there, I can kind of structure that into the deal. The vast majority of these are owned outright. I don’t want to get, I’ve done sub two deals in the past. They’re clunky. You know, some people are cracking down on them as far as, you know, lenders and whatnot. And that’s not my bread and butter at all. Somebody has a property that they have 150,000 loan balance and it’s worth 250.

Dylan Silver (11:26)
Yeah.

Jason Coleman (11:35)
I’m I’m not gonna waste my time trying to say that, I’ll give you $150,000 to pay that off and that I have a $100,000 loan with you.

Dylan Silver (11:42)
Now, vacancy versus occupied is one preferable. Do you prefer having a tenant in place or do you prefer it being vacant?

Jason Coleman (11:50)
I find most tenants understand they’re getting a deal. If it’s occupied and it’s well below market rent, I show up, look, I’m the buyer. You and I both know that this thing should be running out for an extra $500 a month. I’m not gonna do that right away, but over the next two years, we need to get to a mark. We need to get to 2,000 a month if you’re paying 1,500 a month. I’ve had plenty of tenants leave. I’ve had plenty of tenants, you know, I’m the bad guy. I mean, I’ve bought houses that were getting.

bought one recently, I guess about a year or two years ago at this point. Three bedroom, one bath house in Greensboro. His rent was like $485 a month. The market rents in current condition was like $1400 a month. The lease was in place literally since the late 80s. And he turns around and says, dude, you’re going to bump up my rent to $1000 a month? And I’m like, yeah.

do this to make these numbers work. I’m still giving you a $400 a month deal. He ended up staying in the property and then a year later moved out whatever the deal is, which I actually, I would say I prefer them vacant, right? Because I don’t have to deal with, if I have to structure in this market rent run up with the lease, like, over the next year, I got to bump you up over the next two years. I have to factor that into the deal, right? So I can’t just day one, get market rents on it or clean it up a little bit.

listed for rent and 30 days later, I’m getting market rents. I don’t, I tell the seller that like, Hey, if you want, mean, I have some sellers that they want me to keep the tenant. just don’t want to, they don’t want to displace the tenant, whatever it is. But after you buy it, it’s on you. I have bought one seller finance deal that she made me promise to keep the tenant in there at the current rent level for a year. And I put that in writing in the closing documents. Again, I fact, I structured that into the deal. Like, Hey,

I’m getting $1,000 less rent per month. I have to give you $12,000 less on this property net right off the bat. I think I ended up getting like $15,000 off of the loan. So there’s ways, it’s really creative. The more you get into the weeds with any seller, figure out their problem. And if they want the cash flow versus the cash, it’s got seller financing written all over it.

Dylan Silver (13:57)
Bonus question here, Jason. Getting off of the runway, so to speak, from going from a couple of these deals to then 40, what’s been the most important factor in scaling your business?

Jason Coleman (14:49)
Man, I wish I could tell you I’ve got some crazy CRM and I talk to a lot of people about real estate, but I think, I mean, a lot of people get focused on, I need 2,000, 5,000 leads, whatever, I get it. This is all about marketing or whatnot. I find, I literally have a list that’s on my computer of my 20 VIPs that I’ve grown over time, but people that I really identify, I can be my true self with.

and we’re aligned, we’re family oriented. They have grown their portfolio. Their family doesn’t want to take it over.

I will say when you first get started, it’s all about accuracy by quantity, right? You want to have as many, I mean, I literally door knocked when I first got in this business.

Long story short, lost my job, bought my first house. This was like 10 years ago at this point. Told my wife, hey, I just lost my job, not in real estate at all, completely different industry. We had just bought our first house. Then it turned into three months after that, bigger pockets, know, started reading the books and whatnot. Like, hey, we’re going to turn this into a rental. I had a non-compete with my old, old industry. I moved to a separate area, Wilmington, North Carolina, and started, I bought my first flip house. I was like, hey, we’re going to be landlords.

Dylan Silver (15:42)
Yeah.

Jason Coleman (15:54)
We turned around and rented another place in Wilmington while I still working at W2. And then that really took off. On my first flip deal, I made more than I made in six months of my previous business. So it was like I was hooked right then and there. We bought another home in Wilmington. It’ll kind of live in, flip, actually, it’s still a rental. We still have that one.

And then it turned, it slowly, I got my license as like a side business. I got the agent license as like, could save 3 % on these rentals and these flips that I’m purchasing. Well, it turns out that turned into a big thing too, because you can provide more options with sellers. Sometimes it definitely ties my hands, right? You got a wholesale or just straight investor. They can offer something way lower than I can most times. I mean, I still make my cash offers, right? But I tell each client, this is what I feel confident I can list and sell your house for us.

You choose the options that you want cash offer, seller finance or let me list it for you. When I first got lost or short, when I first got into the real estate biz, I literally knocked doors for four hours for three hours a day, four days a week, Monday through Thursday, made all my phone calls in the afternoon. And I did that for six months. I literally got my license in 2019 as an agent, had no idea what I was doing as an agent and just started randomly knocking on doors all over Greensboro. That built

a confidence, a thick skin. I was bumbling for the first two weeks of like, I can sell your house, I’m gonna buy your house, I don’t know what to say. And then you provide value. have contractors, I have lenders, what do you need? I just wanna be your resource, right? I ended up making an offer on a guy, I knocked on his door, he wasn’t there, the neighbor gave me his information, the parents had just passed away in that house. We could not make the numbers work on that flip property. And he said, but hey,

I like how you do business. seemed like a straight shooter. He referred me to a lady that had 30 houses. This was after I already had two or three seller finance deals under my belt. I ended up selling half her portfolio and buying 11 houses from her from a door knocking campaign from just face to face human connection to, Hey, after talking with this guy for a couple of weeks, had some coffee with him, met him at the house a couple of times. You never know where those and in that, again, the first deal was like,

Dylan Silver (17:47)
unbelievable.

Jason Coleman (17:59)
A simple seller finance, 5 % down deal. think back then it was like a $90,000 house. And then it turned into, whoa, you can buy a ton of real estate all at once, where she didn’t have the amount of cash in her bank account she wanted.

So we sold 15 of them on the market. She kept, she still has a few of them. And then, all right, she got this million, one and a half million dollar cash injection into her bank account, paid taxes on it. And then six months later, we signed the deal to buy 11.

from her all at once, no money down on like a 4%, 5 % edge trade. And it just blew my, mean, really like that. Every deal kind of blows my mind somehow. I some are kind of normal at this point, but I mean, that one was a just game changing deal for me of I just acquired all of this and I actually got paid at the closing table when you factor in the security deposits that were transferred over, right? So it’s, the deals are out there. you…

Dylan Silver (18:29)
That’s unbelievable.

Yeah, so this is what exactly,

you know, it’s a contact sport.

Jason Coleman (18:53)
If you provide the value,

if you provide those options, that value, you kind of understand where they’re coming from. It really is a mutually beneficial thing. And that return on any of these zero or 5 % down deals is just, it really is infinite. It’s like you just created something from nothing. You inherited all the headaches, you smooth all that out. I renovated some of them. Most of them were all, they were all occupied in that case. ⁓

just over time, it’s now, mean, that deal alone has made me over a million dollars in a five year period. Just one deal, for sure.

Dylan Silver (19:24)
We’re coming up on time here, Jason. Any new projects that you’re working on and then what’s the best way for folks to reach out to you or your team?

Jason Coleman (19:31)
Yeah, you can check out my website, ⁓ triadexitpartners.com It’s my business. I focus on landlords exiting the business for the most part, trying to provide options. As far as projects, I am head first down the rabbit hole on Claude Cowork. Dispatch, this AI revolution that is happening, it’s writing offers now for me automatically. I leave the appointment, send a voice memo. It puts all the information into loop, into Docu-Sign.

gets an offer to them right away that my full-time admin used to do all that, my human admin. And now this world is kind of scaring the heck out of me with just what’s about to come down the pipe. But I do think AI, if you’re not, I’m pretty old school anti-tech until Chachi Beti showed up. And I really thrive on just face-to-face stuff. But I do think AI, if you’re not diving into this really every day, I mean, I’m sending tasks now through my phone.

checking permit records, doing a bunch of different thoughts and ends where my first thought now and what I’m building is, can Claude do this? hey, whenever I get a task that goes on my plate, my first response in my head is like, is this something that Claude can take care of for me? Can I build out these skills? And I’m finding the success rate is pretty, it’s already in a three month period, gotten pretty crazy with what this stuff can do automatically. The more you train it.

Dylan Silver (20:47)
Jason, thank you so much for taking the time. Thanks for joining us.

Jason Coleman (20:51)
Thanks for having me.