OWNER FINANCING HELP

3 Replies

I am just starting off and have completed my LLC. I would like to be able to offer owner financing on some of my properties. How can i accomplish this such that the purchaser benefits from the tax deduction at the end of the tax year.
I would like to be able to identify individuals who might need some push towards homeownership and offer a short duration finance period (10yrs) and hopefully get it refinanced before the third year so that i can get my money out. ANY help is appreciated. thanks

talk to a real estate attorney and your CPA about setting that up. it's not that hard if you have someone who knows what they're doing.

also - i'm not sure what you mean by refinancing a loan - if you sell the property to someone where you hold a 10 year note - the property is not yours to refinance anymore - you've sold it...it's up to the buyer (owner) to refi and pay you off.

also - if you buy using conventional lending (bank loan) - then simply "holding a note" is not doable because the prop has a mortgage recorded on it already - in first position (your lender). now if you Lease Option the sucker - you'd be messing around with your mortgage agreement (DOSC).

Thanks Noobdog for the advice - i see that i was not quite clear about the financing. This is what i meant.
I will purchase the house outright ( low value house) and hence will have no mortgage on it.
I will find a buyer and have them accessed by my mortgage broker to determine what they need to do to be able to purchase a home on their own including saving and credit repair.
Based on the prospect I will sell it to them and the financing - buyer pays small down payment and i do the loan for 10 years.
During the next two years I will work with my mortgage broker to get the buyer in the position to refinance the property so that I can get my money out. (So Noobdog, the refinance is the doing of the buyer).
I dont want to tie up my finance for too long and I think I will get rid of the house quicker if the prospective buyer sees that they can get the tax benefits (as oppose to a lease option). And because I will be doing this with only houses that I purchase for under $20,000, I might get a better return on my money.

Now I have a couple of questions:
1. I have an LLC set up for real estate investment - can I finance a house for a buyer (do the regular 10 yr amortization) collect the interest and provide the buyer with the tax form for interest payment at the end of the year or will i need to set up a separate finance company?
2. Does any one know a good real estate lawer in NC that could help me?

THANKS

wata -

i understand the whole "have the buyer refi" to pay you off - but once they own the house - even if you're the lender holding the mortgage - you can't "force" them or even "work with them" to do anything. so unless you're selling to someone you know - that might not all work out the way you want it to.

at 20k - are you buying below market value (the basis for any investor - BUY LOW). investors don't buy stocks, businesses or other investments unless there's something in it for them - and that means the investment is usually BELOW MARKET - if you're not - be VERY CAREFUL.

1. - no you will not set up a "financial company" - your accountant should be able to do this for you - or attorney.

2. Pursor - they're located in Charlotte. i can't say they're amazing or anything - they just helped me close on my personal home there a few years back.