All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Hard Money Lenders Insurance Contractors Investment Companies Build Your Team

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
ForumsArrowTax Liens, Notes, Paper, & Cash Flows DiscussionArrowOwner Finance w payments
  • Newest Posts
    • Newest Posts
    • Unanswered Discussions
  • Trending
    • Top Discussions
    • Trending Discussions
  • Browse Forums
Search Nova
Create post

Owner Finance w payments

11 Replies

  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
Rotate Log in or sign up to reply
user profile avatar
  • Posts 73
  • Votes 38

Johnna Lodge
Rental Property Investor from Mableton, Georgia

posted almost 2 years ago

I have a family who wants a no interest loan.

I explained I could amortize the loan but give them a payment. I ,like a bank,  loan is amortized. due to their culture n beliefs they can't pay interest. 

I require 20% down to owner finance. The property price is $190k this year ( they r going to do a rent to own until they can reach the 20% down).  

They said they wanted pay off for 10 years.

I will not go the route of principle only.

Just trying to find a way to make it work for all parties.

Ty

Rotate Log in or sign up to reply
user profile avatar
  • Posts 150
  • Votes 66

Gary Headrick
from St. Marys, GA

replied almost 2 years ago

Raise the price to whatever point you need to cover the required interest.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 198
  • Votes 129

Patrick Daniel
Flipper/Rehabber from Pensacola, FL

replied almost 2 years ago

You could do a few things:

Make them pay hefty points up front, charge more for the home, charge a monthly/annual loan servicing fee.

Also, there are some services out there that offer products similar to this with risk sharing, also many cities have Habitat 4 Humanity (or similar) when they work with a family, their terms are no-interest (In all of the localities that I have worked with them, at least). I know that doesn't exactly help you, but it could help the buyer if you can work something out between the two of you. H4H does normally have income limits though, so they may not qualify for the program.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Traditional Financing and Real Estate Finance
  • Posts 819
  • Votes 742

Kris L.
from Tampa Bay Area, FL

replied almost 2 years ago

If they can’t pay interest due to religious beliefs, are they ok paying a “loan management fee” or whatever you want to call it besides interest?

Rotate Log in or sign up to reply
user profile avatar
  • Posts 57
  • Votes 34

Chris Baber
from Weaverville, North Carolina

replied almost 2 years ago

A 190k sale price with 20% down is a loan on 152k.  At 7% interest, and 360 months amortization your payment will be $1011.26.  To back into the loan amount at the same payment, but at 0% interest, you end up with a loan amount of $364,053.6, so a sale price of $455,067.  That might not be an easy sell.

They may also believe they can't pay taxes, but we don't live in a world where that works.  Borrowing money costs money, whether you believe it should or not.  If they believe they cannot pay interest, they mean to say they believe they cannot borrow money, because that CAUSES interest, so they have to avoid the cause (borrowing), or get over it and pay what we all have to pay.

Just my opinion.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 1.5K
  • Votes 808

Tim Herman

replied almost 2 years ago

@Johnna Lodge It doesn't look as bad on a 10 year amortization schedule vs @Chris Baber 30 year. $152000 at 7% 10 year = $1974. Total payments would be $236861/120 =$1974. Total property price $274861. It would take 43 months before it would be lower than the $152000 mortgage conventional. I don't know what would happen if they sold before that time.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 73
  • Votes 38

Johnna Lodge
Rental Property Investor from Mableton, Georgia

replied almost 2 years ago

Thank you all.

I would have to charge them a lot of points to cover amortization.

Yes they may not like a sales price of $274,861 in 10 years but they do not have the 20% to put down today..I just have to lay it on the table for them and they have to decide. This may not work for them. I don't feel comfortable doing any other way for me. 

I explained to them the shorter the period the higher the monthly payment. I think close to $2K in monthly payment would not be reasonable for them and they wouldn't like a purchase price of $274,861.

I was trying to see how to make it work for all.

Rotate Log in or sign up to reply
user profile avatar
  • Posts 57
  • Votes 34

Chris Baber
from Weaverville, North Carolina

replied almost 2 years ago

152,000 @ 7% for 120 months = 1764.85/month

1764.85/month @ 0% for 120 months = 211,782 loan amount, 264,727.50 sale price

better than 30 year, but not great either.

Best they understand how money works and interest is a part of life if you borrow money, and just deal with it.

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Rentals, Flipping, and Team
  • Posts 3.8K
  • Votes 3.0K

Chris Seveney
Investor from Northern Virginia

replied almost 2 years ago

@Johnna Lodge

Get a mortgage loan originator involved ASAP if it is owner occupied.

1. There are strict rules what you can and cannot due.

2. Someone beliefs about not paying interest - that’s a first and that would lend me to believe these people will be trouble

So do everything by the book

Rotate Log in or sign up to reply
user profile avatar
  • Posts 306
  • Votes 338

Kevin S.
Accountant from Tulsa, OK

replied almost 2 years ago

@Chris Seveney in regards to your comment #2, many who follow the Islamic faith believe that paying interest is against their religion, so I would be careful making a blanket characterization of "that would lend me to believe these people will be trouble." Here's some quick reading from Wikipedia on the subject or you can just google it.

https://en.wikipedia.org/wiki/Riba

Rotate Log in or sign up to reply
user profile avatar
Check Rosette Top Subjects:
Rentals, Flipping, and Team
  • Posts 3.8K
  • Votes 3.0K

Chris Seveney
Investor from Northern Virginia

replied almost 2 years ago

I was not aware of that. 

My post was not meant to be negative towards anyone’s faith or religious beliefs. 

Rotate Log in or sign up to reply
user profile avatar
  • Posts 6.0K
  • Votes 9.4K

Dennis M.
Rental Property Investor from Erie, pa

replied almost 2 years ago

i would have no dealings with people who dont pay interest . That’s a bad business practice . You can’t find somebody else to buy the house ???. These Same folks think nothing of student loan debt to go to our colleges or getting business loans . All these have interest so it’s hypocritical. Run don’t walk from such people

Rotate Log in or sign up to reply
  • 1
Related Resources Tax Liens, Notes, Paper, & Cash Flows Discussion
21 Real Estate Professionals You Need on Your Team (Updated 2021)
Do You Need a Real Estate Partner?
Selling Your LLC? Make Sure You Transfer Your Ownership Interest Correctly
How to Protect Your Property With Landlord Insurance
Customer Relationship Management: The Holy Grail of Business Success
Resources Read, see, and learn more!
Link Real Estate Investment Calculators
Link BiggerPockets Blog
Link Path to Purchase
Link Mortgage Loans
Link Find a Contractor
Link Real Estate Agents
Link Hard Money Lenders
Link Real Estate Listings

Top Contributors

Chris Seveney
Chris Seveney
Northern Virginia
10.0
Score
David Putz
David Putz
Jackson, NJ
2.6
Score
Mark Hegenbart
Mark Hegenbart
Guaynabo, Puerto Rico
2.49
Score
Bob Malecki
Bob Malecki
Kingston, WA
2.15
Score
Tracy Z. Rewey
Tracy Z. Rewey
Orlando, FL
2.15
Score

Tax Liens, Notes, Paper, & Cash Flows Discussion Trending Discussions

  • Neighbor has passed away with the state taking over his house.
    3 Replies
  • Seller Financing a BRRRR property
    3 Replies
  • Jumping in the Note business
    12 Replies
  • Looking for Attorney Recommendations in TX, KS, and PA
    6 Replies
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.