Why is he owner financing?

[Account Closed]

Building a list of owners to contact and I have come across a multi unit rental property for sale that confuses me because the owner is offering owner financing. The owner has completed some upgrades and there doesn't appear to be too much work ($5k or less) to get this thing 100% rentable. 

So I guess I am trying to figure out the sellers' motivation for marketing / highlighting the fact that he will do owner financing?  

Please keep in mind that I am a complete NOOB (only been studying this stuff 8 hours a day for the last few weeks). But, the reason I suspect he may be offering owner financing is because the property is classified as commercial property, thus making the downpayment requirements higher (20-25%) for commercial lenders, if I understand correctly? 

Just hoping to get an idea of situations where a deal "looks good" on paper where the owner is offering owner financing but turns out to be a disaster.  Thanks!

[Michael Bowie]

Hi Jay,

Unless it’s 4 units or less AND the buyer is going to use one of the units as a primary residence, then the down payment is going to be around 20%, regardless.

It seems that you are categorizing owner financing as negative. That’s not always the case. There are many reasons why an owner would be interested in owner financing. One of them being, it turns the property basically into an annuity, or a fixed monthly payment, without having to do any management or work. If the owner is older, this is common.

I love looking at properties that offer owner financing as it offers much more flexibility in the deal. However, with all this being said, you definitely want to do your due diligence just like on any deal.