Owner Financing, do you suggest it?

[Mary Erickson]

I am selling a few properties I've had for awhile and don't need the cash right away, I do want my money to make a return and getting the interest on the loan seems like a good way. I would do a 3 or 5 year balloon and I was told this was easier on the lower end properties because buyers would be more likely to need seller financing. It seems like I would lose if the housing market tanked but I would just rent the house out in the case that someone walked away and I would keep the 20% to 40% down.   I am talking about property in Dallas and in California.  One of the properties is a commercial building in Dallas.  What pitfalls am I missing? is this a bad idea?

[Lydia R.]

@Mary Erickson Im in the Dallas market and seller financing is extremely popular especially with lower end properties. The 3-5 year balloon will work for someone who just needs time to repair their credit, but most seller finance buyers will not qualify for a bank loan of any kind and this is why they look for seller financed properties instead. Ive seen interest rates as high as 11.5% in Dallas. If you dont want to hold a 20-30 year note then you can always sell the note after 2-3 years for pretty close to the current loan balance at the time of sale.