Lexington, KY · Member since 2010 · 315 posts · 133 votes
I am in the market for long term buy and hold rental properties. I have the cash to acquire a couple of units but would rather use that cash as a down payment in an owner financing scenario. I do not believe that I am in a position to get bank loans very easily, which makes owner financing more attractive.
I have come across some sellers who are open to the idea of owner financing, depending on the terms. I need help in crafting the terms of the note that will be both attractive to the seller and beneficial to me.
My thought has been to offer around 20%-25% down, 6% fixed interest, and a 15-20 year amortization. But, I wanted to post here first and get some suggestions so that the owner financed offers I make are as clean, concise, and coercive as possible.
Owner financed deals can be incredibly lucrative depending on the income and expenses you're responsible for. I just recently structured a few deals myself and the terms were pretty similar to the yours and the cash flow was great. I would suggest you look at past history on the properties you're buying as far as maintenance costs and repairs because those can cut into cash flow and that's not fun when you have payments to make.