Litigation

Consider Owner Financing

By David Austin and Barry Goldberg

In the current market, it is hard to get loans to buy properties and many real estate sellers are stuck with properties they can’t sell. There is a plan B! Plan B is to be the lending institution. In other words, sellers can use owner financing to sell the properties and then turn around and sell their owner financed note.

To make a good marketable note that you can sell for the highest amount you should do the following:

• The down payment should be at least 10%.
• A competitive interest rate, not too low, not too high. In general, 8-10% is reasonable.
• Monthly payments are for principal + interest. Avoid interest-only terms.
• Avoid Balloon payments.
• Credit score, the higher the better. Make sure you get a credit report on the prospective buyer.
• The note has to be in 1st position.

In addition you can ask for a higher purchase price when you carry the financing. This is very doable, but please seek professional help if you have questions. Ask around for a local real estate broker that is familiar with owner financing, or contact us, we are here to help.

Full post as published by Cash Flow Solutions Blog on July 06, 2008 (boomark / email).