Owner financing question

[Shantel James]

For owner financing, can you put in the contract that the buyer has try to refi within a certain timeframe? If so, how would that look and how to enforce? Thanks!

[James Wise]

Originally posted by @Shantel James:

For owner financing, can you put in the contract that the buyer has try to refi within a certain timeframe? If so, how would that look and how to enforce?

Thanks!

 In real estate everything is negotiable.

What I would recommend doing is setting up a balloon payment.

Example.

123 Main street sell to a buyer for $100,000. Buyer brings 25% down. The remaining 75% is lent to buyer on a 30 amortization at 5% interest with a 5 year call. 

This means that everything is due to seller in 5 years but the payments are amortized just like a traditional 30 year loan. The idea behind setting it up this way would be for the buyer to resell or refinance before the end of the 5 year term.

It works for buyer because their payments are much lower amortized over those 30 years then if they were amortized over 5 years. It works well for the seller because they will end up netting more this way as the all of those payments for the 1st 5 years were mostly interest and very little principle pay down.