It takes more work on the front end, but the value created is well worth it in my opinion. I choose to take the extra steps when selling property with seller finance. All closings are through an attorney, with title transferring to the buyer. My buyers make a Promissory Note in my favor and sign a Mortgage/Deed of Trust collateralizing the property. This is the way banks do it. They aren't using Contract for Deeds or anything else. The biggest advantage to this strategy is when it comes time to convert the equity in a promissory note into cash, in trade, or as currency. I just sold a note that I originated in Jan 2020. It produced decent cash flow and I planned to hold it to maturity. Times change and new opportunities arise. I needed to convert my equity in the note to cash. I was able to do so with a national note buyer - they bought my note discounted to yield at 11.88%, handled all the paperwork, and I was paid via wire in 23 days from the time we signed the sale agreement. You can do this with a CFD, but the discounts get bigger. This means that you received less cash as a percentage of the UnPaid Balance (UPB), because a CFD isn't always as clean as a Note/Mortgage. People will also buy or lend against Lease/Option, but again, that buyer pool is small and you're likely to trade away a bigger percentage of that equity.

Here is a back of napkin analysis on how i underwrite my SF deals. 90% of the houses I do are entry level or starter homes. My buyers are currently renters. So I am looking to position them between renting and buying at the same monthly payment Example - 3BR-2BA 1200sf house Market Rent - $1600/month Property Taxes - $45/month Homeowner Insurance - $60/month Loan Service Fee - $35/month This means, my seller finance principal + interest payment (PI) on the seller finance sale can be $1,460 (Market Rent - (Taxes/Ins/Loan Fee)) so the all in monthly payment is equal to market rent. Seller Finance Loan Terms - 360 months 10.0% Interest Rate $1,460 PI Loan Amount - $165,604 Assume a $25,000 down payment from buyer and now our Seller Finance Sale price is at $190,000 If I'm making offers on properties, I shoot for 45% of seller finance value if the house needs some work or 65% of seller finance value if just a clean up before resale.