I have rentals that I own and I am considering owner financing them to buyers. I'd like to know the downsides of turning a rental property into an owner financed property from someone who's done it. I understand that evicting someone is a lot easier than foreclosing, is that true?
owner occ carry back is sub too dodd frank. sell to investors is not..
What does, "owner occ carry back is sub too dodd frank" mean in english?
@David Key It means residential owner financing is subject to the SAFE Act and the Dodd Frank law which impose significant regulation, expense and risk on owner financing. This is regulation that is supposed to protect consumers, but instead it has caused a lot of owner financing to dry up. Why take the risk of suffering expenses and penalties under the SAFE Act, the Dodd Frank law and other so-called consumer protection statutes.
To your other question, yes evicting is relatively easy while foreclosing take a lawyer. In my limited experience foreclosing, we had to hire a lawyer and give different kinds of notice to our tenant & then buyer, publish in a local newspaper, and *not* earn several months of rent, plus we had to spend money to repair damage that the disgruntled tenant buyer caused to a newly renovated property, while on the way out of said property.
I DO like to carry a note back, which gives a stream of income and reduces capital gains taxes from the sale.
All that said, each State is different in timelines and notices, and so forth. This was in the early 90s, and we didn’t screen very well. Screening would have minimized the pain.
yea tenants get pissed when they're evicted from a rental too.
I had a friend that used to for sale by owner and finance the deal to people that were in the gray area on purpose. High interest rates plus a healthy down payment. She did really well at it. Sold some of her houses three times and got a big down payment each time, plus rent/payments. Seems very lucrative. I've lost contact with her. As John T says it looks like the free market has been limited by regulation.
Thanks John T that answers that.