Need Owner Financing Advice (Im the owner)

[Brandon Smith]

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

[Chris Seveney]

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

 you got it covered it seems. My question would be what happens if the bank calls the loan due to the sale? How are you going to handle that? 

[Brandon Smith]

That’s a great question. I’m hoping they don’t. i’m being up front about my intentions with the loan officer i’m working with as i’m trying to do a cash out refinance. So hopefully he’s being honest with me.

[Preston Dean]

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

Are you needing out of the deal asap? 

If not MLS shows only 27 DOM. Give it some time.

Most of the properties you might be comparing them to are new builds from 2022 & 2023.

Regarding your question, just have your agent put that option on there I know many investors who would be interested in seller financed deals 

[Jay Hurst]

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

What kind of financing is the 165k?  Is it a conventional loan or something else? 

[Brandon Smith]

thank you very much for your reply. Do you think 27 DOM is not bad? How long would you give it?

[Brandon Smith]

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

[Brandon Smith]

Quote from @Preston Dean:

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

Are you needing out of the deal asap? 

If not MLS shows only 27 DOM. Give it some time.

Most of the properties you might be comparing them to are new builds from 2022 & 2023.

Regarding your question, just have your agent put that option on there I know many investors who would be interested in seller financed deals 

 
thank you very much for your reply. Do you think 27 DOM is not bad? How long would you give it?

[Brandon Smith]

Quote from @Brandon Smith:

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

 hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

[Jay Hinrichs]

Quote from @Brandon Smith:

Quote from @Brandon Smith:

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

 hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

Your not going to wrap a hardmoney loan what are you thinking ?? HML are normally 1 to 2 years or so. Plus they will for sure call the loan if you dont pay them off.  maybe I am missing something but you need to sell for cash. pay off the loan and be on your way.

[Brandon Smith]

Quote from @Jay Hinrichs:

Quote from @Brandon Smith:

Quote from @Brandon Smith:

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

 hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

Your not going to wrap a hardmoney loan what are you thinking ?? HML are normally 1 to 2 years or so. Plus they will for sure call the loan if you dont pay them off.  maybe I am missing something but you need to sell for cash. pay off the loan and be on your way.

 Of course not. I would be doing a cash out refinance first. Yeah that would be crazy

[Brandon Smith]

Quote from @Account Closed:

It sounds like you're considering some creative financing options for your house in Fort Worth, Texas. Owner financing can be a smart move, especially in a transitional neighborhood. 

Your terms seem reasonable, but 10% interest might be a bit high for buyers. Have you thought about offering a lower rate to attract more interest? Also, 30 years is pretty standard for a mortgage, so no worries there. Good luck with the sale, and I hope you find the right buyer soon!

Thank you for the encouragement 

[Jay Hinrichs]

Quote from @Brandon Smith:

Quote from @Jay Hinrichs:

Quote from @Brandon Smith:

Quote from @Brandon Smith:

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

 hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

Your not going to wrap a hardmoney loan what are you thinking ?? HML are normally 1 to 2 years or so. Plus they will for sure call the loan if you dont pay them off.  maybe I am missing something but you need to sell for cash. pay off the loan and be on your way.

 Of course not. I would be doing a cash out refinance first. Yeah that would be crazy

that makes sense.. as others have mentioned in your scenario owner carry to me is last resort give it 90 days at least. 

[Brandon Smith]

Quote from @Jay Hinrichs:

Quote from @Brandon Smith:

Quote from @Jay Hinrichs:

Quote from @Brandon Smith:

Quote from @Brandon Smith:

hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

 hi. Thank you for your reply. It is Hard Money. Monthly interest is $1443.

Your not going to wrap a hardmoney loan what are you thinking ?? HML are normally 1 to 2 years or so. Plus they will for sure call the loan if you dont pay them off.  maybe I am missing something but you need to sell for cash. pay off the loan and be on your way.

 Of course not. I would be doing a cash out refinance first. Yeah that would be crazy

that makes sense.. as others have mentioned in your scenario owner carry to me is last resort give it 90 days at least. 

 thank you very much. I am going to heed your advice and see what happens at leas another 30 days

[David M.]

@Brandon Smith

I'm not sure why you'd want to do this, other than I think this is a money grab on your part?

In general, I'm not a fan of owner financing since now you have to take a significant credit risk on probably somebody you don't know.  Yeah, the common response to that on a owner finance is "you can always take back the property."  Yet, the common response in most other situations is "foreclosure is a pain, generally takes a while, and you might get the property back in a mess."

I didn't think rates are that high, or are you doing 10% because you are assuming its somebody that couldn't qualify for a conforming loan?  Plus, you make the NIM on the wrapped loan.

You consider doing a 30yr amortization but a shorter term.  If you can get 10%, thats really nice for 30yr, but you might want your liquidity back sooner or not take a chance on your borrower for that long.

The reason to go "creative" is if you have an actual issue.  Of course, if you do...

I'd check the list price of the property.  Perhaps its too high, or as mentioned you have to wait much longer.

I hope this helps.  I guess I'm more conservative.  Good luck.

[Lynn McGeein]

@Brandon Smith my understanding of cash-out refi is they may not allow it if it’s been listed for sale in last 6-12 months, so check on that. Also, I’d make the down payment large enough to cover damages if they don’t pay and trash the house. You may need to foreclose if they don’t pay so make sure you have legal representation to record your interest, and that any notice comes to you, not your lawyers office. My mom lost money when one of my dad’s owner finance deals stopped paying after his death — official notice went to lawyers office that moved offices several years before, so she never received notice for us to show up and protect her interest.

[Brandon Smith]

Quote from @Lynn McGeein:

@Brandon Smith my understanding of cash-out refi is they may not allow it if it’s been listed for sale in last 6-12 months, so check on that. Also, I’d make the down payment large enough to cover damages if they don’t pay and trash the house. You may need to foreclose if they don’t pay so make sure you have legal representation to record your interest, and that any notice comes to you, not your lawyers office. My mom lost money when one of my dad’s owner finance deals stopped paying after his death — official notice went to lawyers office that moved offices several years before, so she never received notice for us to show up and protect her interest.

 Thank you Lynn,

That is very helpful advice…I will definitely look into that.  Im really sorry your mom went through that…People really suck sometimes.  Again, thank you for your feedback 

[Tam Lapp]

@Brandon Smith give it some time man... there's an *** for every seat.. 

[Preston Dean]

Quote from @Brandon Smith:

Quote from @Preston Dean:

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

Are you needing out of the deal asap? 

If not MLS shows only 27 DOM. Give it some time.

Most of the properties you might be comparing them to are new builds from 2022 & 2023.

Regarding your question, just have your agent put that option on there I know many investors who would be interested in seller financed deals 

 
thank you very much for your reply. Do you think 27 DOM is not bad? How long would you give it?

 What does you agent say about the DOM?

[Lily Aldridge]

I peeped at your house situation in Fort Worth. Owner financing could be a game-changer, but 10% interest on a 30-year might be a bit steep for potential buyers. I'd dial down that interest a tad – maybe around 5-7% to sweeten the deal. People love lower payments. Also, check how the local market vibes with wraps; some places dig 'em, others not so much. Get a feel for that. Overall, solid plan, just tweak those interest rates for a smoother sell. Good luck with the sale, hope it flies off the market soon!

[Lucia Rushton]

Quote from @Brandon Smith:

Hi Bigger Pockets Family,

I need your expertise. I have a house in Fort Worth Texas, that I am trying to sell, but it is not selling the way I would want it to (beautiful house in transitional neighborhood). I am thinking about opening it up to owner financing. However, I am not too privy on what decent term rates are in this realm of creative financing. I am thinking the following:

This would be a wrap around mortgage as I still owe $165k on it.

Sale Price $245k (market price)

10% down ($24,500)

10% Interest 

30 year (please tell me if thats a bad idea)

Monthly payment based on 30 yr ($1930/mo + tax and insurance) = $2448/mo

Please let me know if i left any pertinent information out.

Any sleuths out there can check it out. 🤓 (1032 E Tucker St Fort Worth, TX 76104)

 Did you clear up any of the issues that were present when you bought it in 2023? previous to your purchase, it was in and out of contract several times. Therefore my guess is it needed more than a cosmetic update. Just a thought.

As always just my opinion and not written with AI