Owner financing

[Account Closed]

Could someone explain owner financing? My understanding is that you find a great deal, use private or hard money to fund the deal. Market for residents that can't go to the bank so they come to you, they put down a non refundable deposit and starts to make payments to you to cover the PITI, your money lender, and your profit monthly. Then you refinance and completely pay off your money lender which will increase your monthly profits until the current homeowner/tenant has the means to get a mortgage from the bank to pay you off. Or is that a lease option? Help! Lol

[Ned Carey]

@Account Closed you are confusing and combining different strategies.

Owner financing means whoever owns the house accepts payments over time for the house instead of getting all the money up front at closing. This is helpful to buyers that may have trouble getting a conventional loan. 

As an investor, you can buy a property with owner financing. This is helpful to you as it can be hard for investors to get traditional bank loans. OR you can sell a property with owner financing and collect payments over time and have a steady cash flow.

What you described is a "wraparound loan". This won't work with a hard money loan as the hard money lender is going to expect to get paid when you resell the property. Also what you described is much tougher to do these days with stricter lending laws. 

You could structure this as a "Sandwich Lease Option" I have always felt this was a risky strategy. I don't know how the new laws like Dodd-Frank affect this strategy.