Making an offer that includes owner financing

6 Replies

I found an off market house for sale for $55k. The owner said she would consider owner financing or lase purchase, but I need to make an offer including that. I have the money and credit to get a traditional mortgage, but would prefer not to tie up my debt to income that way so I can buy more. Can anyone advise on how to approach this in a simple manner with the owner? I would be willing to pay her the asking price if I can get seller financing, otherwise, I think I would offer $48k without.

Are there tax advantages with suggesting that I could pay her points or a higher interest rate in lieu of the higher purchase price?

I would offer her $48,000 with  her holding a 15 year mortgage. You will give her $4,000 downpayment. Monthly payments of $371.30. You tell her that she will actually be getting $66,833.26 for her house. This does help when they hear about the total they will recieve.

Do not use this unless you have to. You do not want her talking to anyone about her holding a mortgage. They can fill her head full of crap.  You can tell her,  if she did not live in the house, the profit will be spread over the 15 years instead of 1 year. Tell her you are not sure about this, she should talk to the person who does her taxes. 

Thanks @Mark Holencik. I like this approach, but I doubt she would do something that long term. She is 65 and tired of being a landlord. She wants to get the money sooner and be done with it. Also, the market is a lot hotter than what I think she realizes. If she had listed on the MLS it would probably go. I thought I might offer a shorter term with a balloon.

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I would present this offer to her. Then find out what she does not like and adjust the offer to her liking.

You could also do a 10 year mortgage. She is already accustom to getting monthly checks. She will still be making money without the headaches of being a landlord. These are all selling points for you.

The tax thing will benefit her.

Mark, would that still ring true if she is already taking a loss on the property? She bought it in 2007 for $62k and trying to just unload it.

I really appreciate your suggestions. Good food for thought. 

Nichole

I tell people that I do not know about the taxes. They need to consult their accountant.  Their income has a bearing on if it is beneficial.

That offer gives her everything back she paid. She does not lose any money with your offer. I have used that as a selling point when they are taking a loss. I have told people that I will give them their asking price if they finance the property.  My offer price and the interest added up to their asking price.  They really wanted to sell and if was the way I could give them their asking price. 

Your imagination is the only limits to your offer.

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