Note & down payment spread on owner financed deal

4 Replies

I received a call from a local landlord looking to off load some properties. He's willing to owner finance them and I see potential for spread, both on note payments and down payments.


Property #1 Purchase Price of $25,000 w/ $5k down and note at 5% on 5 years.

Sale of Property #1 would look like this: $30,000 w/ $7500 down and note at 12% on 5 years.

There's potential for $2500 at closing and about $130/mo in cash flow from each note. There's 8 of these properties available. Note: All properties are free & clear.

Questions: Am I on the right track with these properties? Will I need to enlist an RMLO for the notes or can my standard closing attorney structure these? The above can be performed as a double-close right? Any and all guidance is appreciated! Thanks.


If you need an RMLO depends if you are selling to an Owner Occupant (yes) or an investor (no).   I would not have anyone other then an RMLO qualify an owner occupant.  

If the landlord is offering seller financing, there's a reason.  Why do you think it makes sense for an end buyer to finance a t 12% on this property, or is that just a number you think you can make money on.

@Bob E. An RMLO will be needed then because I plan to market to owner occupants, not investors.

@Wayne Brooks I agree with your first statement and won't come into any of his properties for much more than a wholesale number. 10-12% seems to be the going rate for owner financing in my market. 10% for properties $50k+ and 12% for properties sub $50k. Again, these are just the numbers I've seen in my market. Care to elaborate on why you asked that question in the first place? I'm always looking to gain some knowledge. Thanks!

Seems like a pretty thin deal. I don't think that your interest rate is above market rate for owner financing, but I would be hesitant being on title in this deal, and being on the hook for the note to your seller. Your $2500 profit could easily be eaten up if you have to foreclose, and that is assuming you are in a deed of trust state. If you are in a mortgage state, then you're looking at a much longer foreclosure process. Have your seller sell to your buyer, and assign you the note. No need for an RMLO in that scenario, in my opinion. 

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