Owner Financing – Is It For You?

19 Sep

Everyone has heard that the housing market has taken a beating.  Home sales are down across the country.  Buyers are having a hard time getting loans, even buyer’s with great credit can’t find a lender.  What does this mean to you?

You may want to consider offering to act as the bank by offering owner financing.  That means the buyer would pay you instead of a bank.

If you don’t need the money to move right away, or can get by with a smaller amount that the buyer would put up as a deposit, this could be a great option for you.

What are the pluses?

  • Buyers put up 10-20% of the purchase price just like they would if they went to a bank
  • Buyers make monthly payments to you
  • Buyers have a vested interest in keeping up the property since they now own it unlike tenants who don’t care because its not their house
  • Buyers will do all the repairs, and maintenance and not call you in the middle of the night because the toilet is running
  • You have a steady amount of money coming in every month instead of the wild ride in the stock market or earning less than 1% interest at the bank
  • You have a better chance of getting the retail price for your house instead of competing against the short sales and foreclosures in your neighborhood
What are the minuses?
  • Unless there’s a deed restriction or home owners association rule against it, you can’t tell them not to smoke in the house or have pets
  • Unless there is a home owners association, they may not take care of the yard the way you would
  • If the buyers don’t pay, you may have to foreclose
As an investor, it is very difficult in some markets to do a flip.  The banks aren’t lowering the prices enough to give you a good profit.  This is a great option for a buy and hold strategy.
We are beginning to see more and more of these types of properties becoming available all over the country.  If you’d like more info, just email your questions or comment below.  We’d be happy to see if this is a strategy that would work for you.
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