Seller Financing Investment Properties

[Victor Saumarez]

I’d be interest to know if anyone has offered seller financing when selling a home. The pro’s and con’s are pretty well documented, but it would be interesting to hear personal experiences, good and bad. For anyone trying to sell an investment property in this market, seller financing may offer a good return as it would be quite easy to compete with today’s high mortgage rates. I’d be particularly interested to hear from any real estate attorneys with specialist knowledge in this area.

[Chris Seveney]

@Victor Saumarez

We buy notes and have done seller financing. We rarely have issues because we require decent down payment and qualify the borrower

Where I see people make mistakes is:

1. They over charge for the property

2. Get small down payment

3. Don’t do a thorough review of borrower

We find many notes on secondary market non performing that was a house that would not sell for $50k after six months on market so they owner finance it at 75k. Borrower put no down payment so they have no equity and when they find out it’s worth a lot less they trash it even more and walk away.

Also a big mistake we see is people do not plan their exit. If you write a note and you are not charging atleast 8% you are going to take a steep (30% or more) discount if you go to sell that note.