Your thoughts on Owner Financing for a Newbie!

3 Replies

Do you think it would be OK to sale your first flip by owner financing. If so is there a set of standard terms to owner finance.

Owner finance can be a good way to BUY property. Would not recommend for selling except in certain circumstances. For properties that are in the sweet spot for rentals, seller financing has many of the pitfalls of tenants (late payment, non-payment) but none of the tax benefits. It can work for lower price points if you have a population of non-banking, non-credit using folks with decent provable income. These folks pay their bills but can't qualify for loans. Also at the higher end you have self employed folks not showing much income on their taxes but they have cash for down payment and good cash flow to make payments or maybe folks who lost a house during the downturn but have great income now. 

That can be a lot to sort through. For flips, you want folks who can close and who will not require your attention after the deal so you can move on to the next one (for which you  will need your cash back out if the deal usually). 

@doug McLeod thanks for the reply

I'd have to agree with Doug and advise to avoid it for now. If you think the consequences for choosing the wrong TENANT are bad, wait till you choose the wrong buyer to hold a mortgage for!

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