Owner Financing Popular 2022 Going Into 2023
Like my title suggests, I wanted to create a forum to see what everyone's opinion is on Owner Financing during 2022 and going into 2023. Do you see more owner financing options than you did during the low interest rates of 2020 & 2021? Are you seeing a buyers market emerging with sellers wanting to sell bad enough they will negotiate for owner financing instead of conventional financing? Will this trend continue going into 2023, or could new creative financing options start popping up as interest rates are still sitting at about 6.5-7.5% for 30 year loans?
I've definitely noticed more creative financing options from what I've seen since late summer last year especially. The seller finance option is the most prevalent of the creative strategies I've noticed, but certainly is not the only one.
I'm personally in the process of acquiring a new primary on a seller finance deal so I can convert my current residence into an investment property.
Another option that I've seen out there that I know is an option for so many investors if they can find the right seller is sub to financing. With rates hovering in the range they are, there is a premium to be made on the sellers side if they are holding a low interest mortgage.
With all that being said, I think the buyers market is still strongest with creative financing in tow, and should continue to be as long as rates hover where they are as we go deeper into the year. However, I think things could shift very easily if rates start retracting in the slightest.
I think it depends on the asset class. For my STR company we look at deals 1M plus range so seller know what rates are like and are often advertising seller financing or at least open to it. Also on the flip side as an agent I am helping a guy buy a place with seller financing with a purchase price of 600, this landlord is old and retiring and likes the income. I think Seller financing is mostly born out of necessity and no matter the market people will always need to sell for some reason or another and seller financing it will be the only option.
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Owner finance will run 2023, I went from doing none in 2022 to 4 already in 2023. Sellers made a huge mistake and overpaid for their properties.
Is there a good source/book on how a buyer can go into a seller financed deal with eyes wide open? Surely finding a good contract writer/lawyer with experience in this area is a big step.
@David Goswick, in Atlanta, GA specifically, I don't foresee owner financing emerging anytime soon. The reality is we're still experiencing a seller's market due to limited inventory and aggressive buyer demand in select submarkets. Homeowners have built plenty of equity in their homes these past years that they'd rather tap into by selling than structuring an owner-finance deal. Many of these homeowners are starting to realize that the market is not nearly as hot as it was in early 2022 so prices have adjusted respectively. That being said, if you're trying to source owner-financing deals you'll need to target off-market properties. I would seriously not waste anyone's time trying to owner-finance an on-market listing unless it's been marketed for several months.
I've seen way more listings open to it. They seem to be very reasonable on terms right off the bat as well.