Owner Carry/Financing?

Question

I am  a young real estate investor thats looking for his first deal.  
Although iv tried reading different articles on this topic, i still find it very difficult to understand how owner financing works... i see the term 'own carry mortgage' many times -  word around town is that you can get deals with little down payment? then what happens?

If anyone here has this field as a concentration in their investments, i would appreciate some info

thanks

Account Closed · Answer

and then there are companies like mine who buy the financing notes carried back by sellers which can provide them more cash from their sale.  BTW Sellers would be foolish to give you a deed with no money down.  No money down deals are very rare and typically require additional property for security or some other arrangement that secures a seller's interest in the property being sold or secured by some other method.  Think about it. Why would a seller give up a property of any value and risk losing it all by selling it with zero down to a buyer who would have absolutley nothing to lose.  Nearly all real estate deals require some cash if not for down payments for transaction costs and carrying costs.  Money is what greases the squeeky parts of a real estate deal to make them flow properly.   Once in a while someone does make a no cash required deal but you could spend years trying to find one that works for the parties involved.  I have been buying and investing in real estate since 1962 and have yet to see a no-cash deal that made any real sense.

Scott M. · Answer

To make it simple say I own a home free and clear.

I decide that I want to sell it VS renting it.

Because the credit / appraisal markets are tight and because I own it free and clear and because I don't really need all the cash right now - in fact getting paid each month might actually be nice I put up one of those signs you see a lot of.  $5,000 down / $1,200 / month / 15 year land contract or lease to own.

What that means is I am selling the house for about $110K - getting $5K up front and then going to finance the balance of $105K over 15 years at 11% interest.  In the end I end up with about $221K VS the original $110K I was selling it for.

I then have an income of $1,200 per month.  After 15 years the buyer owns the home free and clear and if all goes well I made a lot more then I would have if I sold outright for $110K.

It can be done even if you have a mortgage on it â€“ you can sell to an investor and they can rent for more then they pay you â€“ is it that easy â€“ well â€“ kind of â€“ but lots more to it once you get into them of courseâ€¦.but bottom line

Emil A. · Answer

I heard somewhere that basically the owner will give you the deed with no money down and what you do is just pay his rent... that seems stupid so I may be wrong

Emil A. · Answer

I appreciate all the replys - thanks!

Emil A. · Answer

so as an investor, how would this kind of purchase benefit me?

Jesse Ramirez · Answer

For the most part owners are more flexible than banks. 
          Means less money down and more room for negotiations. If you were really motivated, you could amass a whole empire of real estate by obtaining homes for no money down by owners who are desperate to sell and will allow you to take them off their hands cheap.

Jesse Ramirez · Answer

Owner financing just means the original owner takes the place of the bank. Instead of having to go get qualified through a bank, the owner accepts payments and obtains all the glory and problems that come with it.

Owner Carry/Financing?

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