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Private Lender for DSCR Loans and Fix & Flip Loans

The amount that the Buyer will be paying to the Seller in consideration for the Seller's real property. The Purchase Price is a fundamental component of the [Purchase And Sale Agreement](https://www.offermarket.us/real-estate-glossary/purchase-and-sale-agreement), otherwise referred to as the [Contract Of Sale](https://www.offermarket.us/real-estate-glossary/contract-of-sale).

The amount that the Buyer will be paying to the Seller in consideration for the Seller's real property.

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Purchase Price - Real Estate Glossary - OfferMarket

What is a Purchase Price in real estate?

## What is a motivated seller? ⏱️

 

A motivated seller is a person or business entity that needs to sell real estate fast. In traditional real estate sales, motivated sellers end up accepting lower offers from buyers because there is not sufficient time to attract buyers and make them submit competitive offers.

 

With OfferMarket you can compare AS IS offers from verified cash buyers. This empowers you to sell your house fast for a fair and competitive price.

 

## How to find motivated sellers

 

There are many reasons that motivate sellers of real estate:

 

- Divorce or separation
- Financial loss (i.e. job loss, business bankruptcy)
- Medical bills
- Job relocation
- Inheritance and estate liquidation

 

OfferMarket is an investment property marketplace where motivated sellers compare AS IS offers from verified investors. If you want to know how to find motivated sellers, [subscribe to OfferMarket's exclusive and off-market deal flow](https://www.offermarket.us/survey/subscribe/deal-flow).

 

#### Related content

 

- [Guide: How To Sell Your House Fast Without An Agent](https://www.offermarket.us/guides/how-to-sell-your-house-fast-without-an-agent)
- [Guide: Selling A House As Is](https://www.offermarket.us/guides/selling-a-house-as-is)
- [Sell My House Fast](https://www.offermarket.us/sell-my-house-fast)
- [We Buy Houses](https://www.offermarket.us/we-buy-houses)
- [Real Estate Wholesaling: How To Find Motivated Sellers](https://www.offermarket.us/guides/real-estate-wholesaling-how-to-find-motivated-sellers)

A motivated seller is an owner of real estate that needs to sell fast. Motivated sellers on OfferMarket sell fast and for a fair price.

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Motivated Seller - Real Estate Glossary - OfferMarket

What is a Motivated Seller in real estate?

#### What is Free Cash Flow? 💰

 

Free Cash Flow, often abbreviated as "FCF", is the cash generated by a real estate investment after all expenses are subtracted from rental income. Understanding free cash flow is important because the safest way to build wealth through real estate is to own cash flowing investment properties.

 

#### FCF Example

 

Let's say you own a house where monthly mortgage principal, interest, taxes and insurance ("[PITI](https://www.offermarket.us/real-estate-glossary/piti)") is $2,300. You reserve an additional $200 per month for maintenance based on the property's condition and prior year maintenance expenses. Now, let's say you rent this property for $3,000 per month. Your free cash flow in this example is $500 per month, $6,000 per year.

 

Next year, you raise your rent to $3,100 per month and your PITI and maintenance budget remains the same. Your free cash flow is now $600 per month, $7,200 per year.

 

#### Why is free cash flow important?

 

Free cash flow is important because owning the property does not reduce your cash balance, it adds to your cash balance. If you own a property that costs $3,500 per month (PITI + maintenance), and only rents for $3,000, then you need to pay out $500 per month or $6,000 per year in order to cover the difference. This is an uncomfortable financial situation to be in, especially if you or your family experiences a loss of income (i.e. job loss).

 

#### When does it make sense to invest in real estate that does not cash flow?

 

Some investors are comfortable investing in real estate with negative cash flow because they expect a market to appreciate. Other investors buy properties with a low % down payment as possible. The lower the down payment, the higher your PITI, the lower your cash flow.

 

#### Related concepts:

 

- [Cash On Cash Return](https://www.offermarket.us/real-estate-glossary/cash-on-cash-return)
- [Cash Out Refinance](https://www.offermarket.us/real-estate-glossary/cash-out-refinance)
- [BRRR](https://offermarket.us/real-estate-glossary/brrr-buy-rehab-rent-refinance)

Free cash flow, FCF, the the cash generated by a real estate investment after all expenses are accounted for. There's more to learn about free cash flow at OfferMarket

Free Cash Flow or FCF - OfferMarket Real Estate Glossary

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What is Free Cash Flow ("FCF") in real estate?

#### What is a 203k loan?

 

A 203k loan is a rehabilitation loan issued by the Federal Housing Administration (FHA) that includes purchase price and construction budget for a property. 203k loans are issued by participating mortgage lenders to qualifying homebuyers who intend to live in the property once construction is completed. A licensed [general contractor](https://www.offermarket.us/real-estate-glossary/general-contractor) is required to ensure the construction is completed on time and on budget. The budget is determined by a 3rd party 203k inspector who issues a Specification Of Repairs ("SOR") which is reconciled with the general contractor's budget.

 

#### What is the down payment for a 203k loan?

 

203k loans require just a 3.5% down payment on the value of the purchase price plus the SOR budget.

 

#### How does a 203k loan work?

 

Let's say you buy a house that needs significant [rehab](https://www.offermarket.us/real-estate-glossary/rehab) before moving in. The [purchase price](https://www.offermarket.us/real-estate-glossary/purchase-price) is $100,000 and the rehab budget based the SOR is $100,000. You just need to put down 3.5% of the $200,000 value or $7,000 plus closing costs. That leaves a loan of $193,000. The bank issuing the loan has an [appraisal](https://www.offermarket.us/real-estate-glossary/appraisal) conducted to make sure the rehabbed property is worth at least as much as the investment price (purchase price plus rehab budget). 

 

An [appraisal](https://www.offermarket.us/real-estate-glossary/appraisal) is conducted and the appraiser determines, based on [comps](https://www.offermarket.us/real-estate-glossary/comps), that the complete house will be worth $250,000. The rehab is completed on budget, with the contractor being paid in 3 separate draws based on work performed against the SOR.

 

At the end of the project, you move into a house that is worth $250,000, with a $193,000 mortgage loan. That means you have 22.8% equity in the property worth $57,000. You went from 3.5% equity down payment to 22.8% equity, for a gain of $50,000 in equity. Not too shabby!

A 203k loan is a loan issued by the Federal Housing Administration (FHA) that includes purchase price and construction budget for a property.