Anyone out there use Owner Financing to make a deal?

[Justin Paul]

I'm looking for some people that have done some multi family owner financing deals. I'm looking at a property but after I saw the real numbers it looks like the property is over leveraged with loans. The rents are right at market rates as well. Is there any ways to make this a profitable deal using owner financing?

[Chris Clothier]

Justin -

If you end up buying an over-leveraged property, especially using owner-financing, then you could be setting yourself up for a financial disaster. A few things to think of - these are points that I learned form doing owner-financed deals.

1. If you are required to put a down payment toward the deal, you need to get it in writing that the closing is carried out by an attorney and the payment goes to the lender to reduce the debt on the property.

2. View a copy of the note for the property to be aware of the remaining terms on the sellers note. You want to make sure that your terms match the remaining terms of that note.

3. Make sure of the financial wherewithal of the seller. I do not know how you do that, but you essentially have no claim to the property as long as there is a mortgage note against it. You have to write into the contract that you get to make the payments directly to the lender. If you cannot, and the property is over-leveraged as you stated it could be, you are in a dangerous position.

I hope this at least gives you a few things to consider when you evaluate the deal.

Chris
Chris