Owner Financing Homes
12/24/2010 - By Brian Jarrett 
Owner Financing Homes
Owner financing homes can be benefit both buyers and sellers of investment properties. Although it used to be difficult to find, the current economy is making it much more common in the real estate investing world.
There are many benefits of owner financing homes – for both buyers and sellers. The biggest benefit for sellers is that you can maximize your sales price by marketing to more people. In today’s credit climate, many potential buyers will not qualify for conventional mortgages. Veteran real estate investors often choose to owner finance homes that they are trying to sell in order to be able to sell rehab properties to other investors and eliminating the need for them to have to find private money to buy the property. Additionally, sellers are able to sell their properties for full market value by having flexible qualifying for their mortgage. It also helps them sell a property that might otherwise not sell at all by providing favorable loan terms. The sellers are also able to provide whatever terms they choose for the property. If they need cash sooner, they can have a one or two year balloon payment. If they are happy with the terms of the mortgage, they can hold it long term.
Seller financing homes for purchase also opens up many options for real estate investors who may be short on cash or have less than perfect credit. It also allows them to purchase more homes than would normally be allowed for investors looking for conventional financing. It also provides more favorable terms for a rehab property than hard money loans. It wasn’t long ago that owner financing homes was nearly impossible to accomplish. However, in the current economy it is increasingly common to find. Keep in mind that even if an owner is not able to finance the full purchase amount, you can always ask for them to owner carry the 2nd mortgage. When buying an owner financed home, remember that everything is negotiable! The more motivated the seller is, the more negotiating you can accomplish. Make sure you know why the owner is selling. This will give you much needed leverage during negotiations.
Another option that is very similar to owner financing homes is the more traditional rent to own, or lease option. This method allows the owner to keep paying the mortgage while taking option money from the buyer. This method provides the buyer with an exit strategy if they choose not to purchase it when the option period ends. However, if prices are favorable this method allows the buyer to “try before you buy” while improving their credit score or building up a down payment with part of the monthly payment that goes towards paying down the principal.
One thing that often concerns both buyers and sellers about owner financing homes is the processing of payments. The buyer is concerned that they will make payments to the seller, but the seller may skip the mortgage payment. Likewise, sellers are concerned that they will not receive the monthly payments from the buyer. Both concerns can be addressed by having the payments processed by a third party escrow or payment processing service. This type of service is also available for processing rent checks. It takes much of the concern out of the transaction while protecting all the parties involved.
If you are looking for homes with owner financing or other creative terms, save time by using our property filter and email notifications to find properties that meet your criteria.
To your success!
Brian Jarrett
REIquest.com
