A Couple of Quick Tips for Owner Financing Today
1. Sell to buyers that will live in the property.
2. Get at least 10% down, more would be better.
3. Close with a 3rd party title company and get a lenders insurance policy from them. You could pass this cost on to the buyers.
4. Make sure you are listed as loss payee and additional insured on the insurance policy.
5. Have a professional servicing company collect your payments, keep the books on these and do the government reporting and noticed required. We are afillaited with a company that also reports to the bureaus and strives to get our buyers financed conventionally whenever possible.
6. Plan on keeping the 2nds. for long term cash flow.
7. Charge a little higher rate than the going rates on conventional mortgages. You can demand a premium because the financing is not available elsewhere as long as there is a demand for the units at affordable monthly payments.
8. You are competing with the local renatal market when you are using seller financing as a way to move properties. Keep your buyers payments (including taxes and insurance) at less than what they could rent a compatatible property for.
Comments (10)
You get a title policy to insure that your lien is in first position.
Marc Faulkner, over 12 years ago
Marc, Great info. Question though, why would you get a lenders insurance policy? Thanks for your response, DL
Deb Long, over 12 years ago
I understand "hind sight is 20/20," Bryan! You wouldn't believe how many poorly written, poorly documented notes we have to evaluate each month that are non marketable. We can still do something with most of these but, they are discounted heavily.
Marc Faulkner, about 13 years ago
Great post Marc....fortunately we do the things you recommended already. It would have been nice to have this post 8 years ago though!
Bryan Hancock, about 13 years ago
Always enjoy your blogs and other posts. Thanks for sharing this information.
Account Closed, about 13 years ago
Thanks for the suggestions Charles, It's helpful for me to have some idea what people want to know about so I don't just end up writing to myself. I will put some thought into these topics and keep you posted. Thanks again and I appreciate your taking the time to check out my blog.
Marc Faulkner, about 13 years ago
Some ideas: 1) knowing all of the costs involved in purchasing notes 2) how to build the much needed relationships 3) how to discount notes and what is an appropriate discount for various note types Just a few questions that come to mind
Account Closed, about 13 years ago
Thanks guys. I would be happy to take some suggestions on what you would like to read about.
Marc Faulkner, about 13 years ago
Enjoyed the read i wish there was a lot more info on seller financing on the site
Steven Horvath, almost 14 years ago
Thanks for the tips, I have been seriously considering seller financing as part of my retirement strategy. Look forward to reading other blogs and forums about creative financing.
Account Closed, almost 14 years ago