Owner Financing. How does this work?

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Hey guys! I have a question regarding a possible owner finance deal. The deal includes 5 duplexes. I have money down for a few but have talked the owner into financing all 5 for the same down payment. My question is this... If he still owes say 100 grand on the note for all 5 than how can I protect myself from him collecting the money and not paying the note? I am not really sure how this deal would really work?? Any help, questions I should be asking, or advice would be much appreciated. As for quick math each unit rents for 550 a month. Asking price is 89 grand per duplex. Thanks

Hi, Corey,

Sounds like you may want to explore "subject-to". That is, taking title to the properties subject to the existing financing. That way, you pay the lender(s) directly without getting new financing.

You'll get a lot of static about "due on sale". However, lenders typically don't call a loan when the payments are consistently current - they sometimes do, but not as a rule and not usually unless they have a reason for it.

One way around "due on sale" is to combine subject-to with a sandwich lease option. In a nutshell, the current owner keeps title instead of deeding the property(-ies) to you - that defeats "due on sale", and gives you a lease-option with the option to sub-lease.

Just some thoughts ...