How to find Owner Financed Properties?

[Mike Nelson]

I'm looking to build a portfolio of properties, practically owner financed homes with a 10 year ballon. I would prefer 0% intrest and 0 down but if I have to bring in private money to make these deals work then that's ok to. My question now is, how do I find these sellers and what specific list should I target?

[Aaron Mazzrillo]

You don't "find" owner financed properties. You negotiate with owners to carry paper. Your best bet is through direct marketing. You can put up "We Buy Houses" bandit signs. You can send mail to properties owners who do not have a mortgage. You can drive for dollars, or scour neighborhoods looking for opportunities.

It is through the negotiation process that you get low or no down payments and zero interest.

Not only have I negotiated zero down and no interest, I also negotiated no payments for 5 years. More than likely, your sellers will want some interest so my question to you is, why wouldn't you pay 3-5% amortized over 30 years?

Balloons are for the circus and should have no place in your investing business (unless they are notes you are carrying back!). They are risky and have high potential to cause great financial hardship if you cannot figure out a way to pay them off. If you had purchased a whole bunch of properties in 2002, at great prices, with very low interest, what would your portfolio look like at the end of this year? Leave the balloons to the clowns and go for long-term amortizing debt. For what you owe today, you will be worth tomorrow!

[Bryan Hancock]

Good luck! Finding people that are willing to accept 0% interest may work if you pay a huge premium on the property. 0 down with 0% interest will be even harder.

[Mike Nelson]

Well let's say 0% with $$$ down...I still would like to find these people.

[Greg LeDoux]

What if you were to offer to pay his monthly net. So basically you are offering to take over the management of the property.

For instance there are several 4 plexes in an area of Portland I am interested in. They are all rented lower than the average rent in the area. 950 per month per unit and avg. Is 1200.

So assuming the gross rent is $3800 and expenses are $1400. I could offer to take the hassle of management and pay him his net every month.

I will assume that the property is rented. Now because gross rent is low, I can increase it incrementally over a 5 year period to create a positive cash flow. If you increase rents 5% each year over 5 years, you will be getting $1200 per unit.

During that time, I could try and offer up cash for 30 cents on the dollar to buy down the principal. For example: in November offer 10k in cash for 30k in principal. This cash would be generated from profits from flips and wholesale deals.

Or ask for a note for 400k at 4.5% over 40 years with a 15 year balloon. $1798 per month.

Please don't hack me on this. Just an concept.

[Aaron Mazzrillo]

You don't "find" owner financed properties. You negotiate with owners to carry paper. Your best bet is through direct marketing. You can put up "We Buy Houses" bandit signs. You can send mail to properties owners who do not have a mortgage. You can drive for dollars, or scour neighborhoods looking for opportunities.

It is through the negotiation process that you get low or no down payments and zero interest.

Not only have I negotiated zero down and no interest, I also negotiated no payments for 5 years. More than likely, your sellers will want some interest so my question to you is, why wouldn't you pay 3-5% amortized over 30 years?

Balloons are for the circus and should have no place in your investing business (unless they are notes you are carrying back!). They are risky and have high potential to cause great financial hardship if you cannot figure out a way to pay them off. If you had purchased a whole bunch of properties in 2002, at great prices, with very low interest, what would your portfolio look like at the end of this year? Leave the balloons to the clowns and go for long-term amortizing debt. For what you owe today, you will be worth tomorrow!

[Bryan Hancock]

Did you pay more with the terms negotiated than you would have with an all-cash offer Aaron?

[Jeff S.]

A great source for owner carry is landlords that want to spread their tax bill. Older landlords not wanting to grow anymore appreciate the income w/o the headache and don't typically need cash. They are usually more sophisticated about carrying paper then your average seller.

[Chris G.]

Why wouldnt you be ok with paying a small bit of interest? Seems like a waste of time on both sides to try and sucker someone out of a few points of interest...

[Johnna Lodge]

I know this is an old thread but i wanted to respond. If you find a seller that is attempting to sell but cannot offer owner financing. You never have to speak about interest. I have bought properties with owner finance and never paid interest. I never brought it up and neither did they. I told them what I could pay monthly and they were okay with that. Easy Peasy.