I bought a duplex for $60k back in May with the goal being to make a cash flow stream, but since the market here is hot this year I've decided to see if I can't sell it. I put it on the market about 3 weeks ago for $89k and have had a couple of inquiries so far. Today I got my first serious offer and I'd like to get y'alls' opinion on it since it's a little unusual.

The prospective buyer is offering $85k which is a good price. He will give me a $40k cash deposit and wants me to owner finance the rest over 4 years at 8% per year. The monthly payments will be $1098/month. The reason he wants owner financing is because the buyer does not have a social security number (foreigner) and so can't get a mortgage, even though he can buy real estate. The buyer wants to close by Nov 22.

I think this deal is OK, but of course there is the risk of default. In Texas it seems like foreclosure is a fairly quick process, so if the buyer defaults I can get them out of the house in about 3 months (I hope) and take possession of the asset. I can also try and get him to sign a Deed in Lieu of Foreclosure...which should hopefully make things smoother.

My real estate agent suggested to put in a clause so that if the borrower defaults they can just turn over the deed to me and if he vacates quickly and leaves the property in good condition I will reward him with $1000. I then get the property back, and of course I keep whatever the borrower has paid ($40k deposit + monthly payments) and I can resell or re-rent the property again.

What do you think? I have no experience with this so any comments or advice is welcome.

In terms of cash flow, this would definitely be better than owning and renting this particular property, and I think there is a sizeable hidden optionality value in the event of default. However, maybe it's not as good as selling outright to someone for $85k. Should I hold out?

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Need advice on an owner finance offer

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