Benefits of Private Financing

3 Replies

Hello, I am curious to know the benefits of doing private financing from an owners prospective. Why would someone be willing to do private financing on a home or investment property?

@Ray Hayward , if I understand your question correctly, I believe you're asking why someone would be willing to provide seller financing to someone buying their property.

If someone does not owe money on the house, and therefore does not need to pay anyone off at the time of sale, and has no immediate need for that much cash, then they very well might be able to earn more by financing the sale themself. First of all, many people are willing to pay a higher price if the seller will finance, and then the seller also will earn more interest than they would've if they took cash proceeds from the sale and put it in a savings account. Plus there may be tax advantages to not earning so much profit all at once.

There's a bunch of benefits and reasons. To name a few:

Seller can get a higher price for their property.

May not need the cash and can collect a higher return then if the cash sat in the bank. (6-8%)

Faster closing

Tax benefits. Since they are not getting cashed out, they can spread the income over the next few years of the loan. etc.

Opens the property up to more potential buyers since financing is based on sellers specific qualifications.

Thank you! I am looking to purchase a 4 family and the seller is offering me to buy before listing on the market as we have been in touch in the past (My mother use to rent there and I love the property). The challenge is my wife and I are in the process of buying a single family so the timing for this isn't great. I currently own a 3 family and have exceptional credit so I hope they will consider private financing.

Other than private financing, is there any other creative ideas to finance this property that someone could recommend?

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