Owner finance or Rentals?

Question

What is the better strategy? Owner finance or Rental Property?

Shawn Thom · Answer

To expand a little further.  I plan on keeping lower end houses at owner finance and maybe sprinkle in a higher end rental here and there.   $89k-$110k seems to be a sweet spot for owner finance.  I've gone as high as $150k.

I'd like to do some rentals with ARV of around $200k.  I'd put those at a 15 year or a 30 year with the goal of paying off early.  I'd be less worried about cash flow on those and just use them to have tenants pay down mortgage to build some paper wealth and have a paid off asset in 15 years.

Shawn Thom · Answer

I have recently started focusing on owner finance and love it.  You get the cash flow and no fixing toilets.  you will get a lot of naysayer's on here, but i haven't had any issues and I know several others who have been extremely successful at it.

I don't know your experience level but if you have not done one before I get some legal advice so you can make sure you stay compliant.

Jason Utley · Answer

Jassem

Thanks for the input! I've had several rentals in the past and it was always a hassle having to deal with maintenance. I always managed the properties myself so I guess having a property manager would help with that hassle.

Jassem A. · Answer

Depends on the situation but I would say it's better to rent a property out than to finance it to someone in most situations.  If a property is condemned or not rentable and you do not want to fix the property then carrying the note could be your best bet.