Owner financing for a fix and flip

[Diya Sharp]

Hello BP family,

I am a new member to the board and need some advice. I own a property outright in Houston that I bought Q4 of last year for 359 K. The property is a gorgeous, but very old historic home in a very desirable area in the city and my plan was to rehab it and possibly make it our home. Long story short, I just finished and sold my last rehab project, which was quite stressful as I over extended myself on time and resources, and my husband and I are expecting a baby in June, and I need a break. So, I decided to put this old home on the market and see if I get any bites. So far I've have had multiple offers - some all cash below asking and one full price that wants me to owner finance a 12 month interest only loan at 4%.  This is a historic home and most banks would not finance it, as it needs a LOT of work (think 250K+). The buyer would rehab and sell the property. I have never done owner financing nor do I know the first thing about drawing up documents.  I've either used conventional bank loans or cash to finance my projects and rentals, so I'm not what the process is here. My questions are:

Can anyone recommend a good real estate lending attorney in Houston to draw up the papers?What do you guys think I should counter them on the rate? Should I be charging points? Basically since I am taking the position of a lender, should I be escrowing taxes/insurance etc? What are the pit falls to avoid?

Thank you all in advance for your help!

[Judah Hoover]

DON'T EVEN CONSIDER THIS DEAL... unless you have completely vetted him. Do they have the $250k to do the rehab, have they done a rehab like that before? The good thing about TX is you can foreclose very easily.

Go to your local REIA club to get referrals of local attorneys that have done this kid of work. All the paperwork in the world cant protect you from this guy being a loser that cant rehab... worry about him 3 times as much as the deal structure and paperwork.