Need some advice on owner financing

Need some advice on owner financing

Real Estate Agent · Utica, NY · Member since 2016 · 23 posts · 2 votes

I am hoping to begin investing in a few months, I have money saved up for some down payments however I am 21 and still in college so I am unable to qualify for conventional financing through banks. I have done a lot of research on owner financing, and I believe it would work really well for me to get myself started out. I have watched my local real estate market closely the past few years, I am on sites like craigslist, zillow, and loopnet numerous times a week seeing what's on the market, what typical rents are, what different types of properties typically sell for. 

Over those few years I have seen numerous different properties advertised online in my area for owner financing, so I know there are plenty of property owners/investors that are open to it. However, I do not want to have to rely solely on hoping I find one of these deals online, I'd like to be much more proactive then that, so I'd really like some advice on things like direct mailing.

For direct mailing, how exactly do you find out who owns homes in your county? Is there somewhere online you can generally go, or do you just go to city hall or something? Also, once you find a list of property owners in your county, how do you screen them to see who owns the properties free and clear? 

Also, if anyone has experience in owner financing and has any other tips and suggestions on good ways to find owner financing opportunities I'd really appreciate it. 

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  • Contractor · Chadds Ford, PA · Member since 2015 · 567 posts · 460 votes
    10y

    Hey @Brandon Bellino, 

    Welcome to the site and congrats on getting started! I was in your same shoes in college and my biggest regret was not actually doing any deals. I am just now getting started 3 years later and I kick myself all the time for not jumping in earlier. 

    If you want to start direct mailing, list source is a good place to start. Look for high equity and possibly absentee and/or trustee owned. Once you have that list, you may to well to drive by as many of those properties as you can and see if there are any signs of vacancy or distress at any of them. Overgrown grass, junk in the yard, lack of maintenance, broken windows, etc. Then write letters to those properties. This will keep your mailing costs down and give you a more targeted list. The hope here is that these are high equity properties that people have either lost interest in, acquired in an estate, or some other scenario that makes them want to sell. 

    In your letters, I would not start with anything about owner financing. Build the relationship then go into it. 

    One good tool you could use if they are a bit hesitant is to suggest that they originate the note, then sell the note on an exchange like FCI Exchange or something similar. Just because they sign a 10 year note does not mean they are locked in for 10 years. Sell that note to another investor and cash out. This usually requires about 6 months of seasoning to work but position it as a way to sell their house today, earn some money on their money, then cash out in a few months. It really is a win win for everyone. 

    I hope this is helpful! Let me know if you have any more questions. 

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