Owner Fi a Flip Property???

Question

I've had a very interesting proposition for a new on the market, higher end, flip property.....A buyer, due to personal issues, has bad credit - but cash in hand. They are asking if they can buy the house using Owner Fi.  They are offering a large down payment and to payoff the loan within a year.

Apart from really wanting my money out of the house, what are the downsides here??

And as this is my first one, what is the process - have them get "qualified" by a RMLO before or after signing or negotiating.......

Any and all insights are greatly appreciated!!

Thanks

James Call · Answer

Laura,

I don't know about high end homes.  I have done seller financing on vacant land.  I just got the good down payment, and had a real estate attorney draw up the contract.If they don't complete the transaction, then they lose some money.  If they do complete it, then you come out smelling like a rose. Maybe something like a lease option?You win either way!

Danny Webber · Answer

All day long.... you do not need an RMLO since you do not meet the # of financed loans per rolling calendar year but it is better to have them determine the ability to repay anyway. (unless the law is changed but i am pretty sure it hasn't)

Jerel Ehlert · Answer

Assuming the property is in Texas, be careful of "large down payment".  If they want to pay more than 40%, make sure it is by wire transfer from a domestic bank.  Better yet, use a title company.  This is a prevalent method of money laundering.  Also, when you hear about "sanctions" against countries and people, there is a federally maintained database of verboten persons.  Banks and title companies used by them filter for these people.

Next, go through a title company (notice a theme?).  You can have your attorney draft the docs.  If you let the title company do it, the attorney works for them not you.  We are at all times very clear about who our client is, and protect their interests accordingly.

Ronald Rohde · Answer

Owner finance is not a problem. Just paper yourself and understand foreclosure risk/cost. Plenty of people can do it.

Laura Engel · Answer

Thanks James!