There are two ways to sell properties in the land business. You can sell for cash or you can sell on terms. Cash is pretty straightforward. You buy low, sell high and pocket the difference. Terms deals, also known as owner financing, are a great way to build an income stream that can provide financial security and long term wealth. But are terms deals always good? In this episode of The Land.MBA Podcast, Dave and I are going to go deep on the good, the bad and the ugly of seller financing. I set a goal when I started in the land business. I wanted to have enough cash flow to cover my costs, including my VA and software subscriptions. My next step was I wanted to not have to pull out of pocket to do mailing campaigns, I wanted my cash flow to be able to pay for that. So I got it to a point where I was still working a job. And I got my cash flow to a point where it was paying the overhead but not yet paying me. So I still had to keep my job. But I kept selling. Sometimes it was a cash deal, sometimes it was a terms deal. I think it’s a great idea to have both because it gives me security and stability. Now, I've been able to quit my job and I have enough cash flow that if I don't sell one property for cash this month. I'm not living high on the hog but I'm paying my bills. And so that gives me the freedom to go out and work on other deals. So many people just coming into the business want to know what is the right mix of cash and terms deals. It's not a straightforward answer, because it depends where they're coming from. If they're at a point where they don't have very much money, then they need to build some capital. For me, I like the 50/50 target but you can't control the market. Maybe it ends up at 70/30, or 60/40. This business requires very little money to get started so I would focus on cash deals at the start.
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