3 Reason Why You Ought to Consider Owner Financing

[Luther Wilson III]

1. The overall returns on your real estate investments will be higher. On a single family home - If you choose to seller finance it, as opposed to simply renting it out - you'll likely get a sizable down payment and there's no maintenance costs or property management costs during your holding period. The maintenance and upkeep is on the end buyer. Run the #'s - next time you do a pro forma on a SFR investment - go ahead and put a $0 in the boxes for expenses on property management, maintenance, taxes AND insurance. (The taxes & insurance costs are offset by your owner finance buyers monthly escrow payment). See what that does to your bottom line. 🙂

2.  It will be significantly easier to mange your investments and your cash flow. When it comes to real estate investing - it might not get more “passive” than this. Imagine being able to invest in long-term, cash flow properties without having to hire a contractor or a property manager…  Even as a property manager and a project manager myself - I’m telling you to avoid it, if you can. It’s totally possible, if you learn to master creative financing and notes.

3.  As the markets change owner financing becomes an even more effective strategy and hedge.  You too can see better results seller financing properties, especially, in times of increased fear & volatility. Part of it is supply & demand, part of it has to do with interest rates and “credit availability”. Then there’s war and politics… Whatever it is - if you practice owner financing - It could look like larger down payments, higher interest rates and increased monthly payments COMING TO YOU as well - that is, if you’re on the right side of the table. #BeTheBank

[Drew Sygit]

@Luther Wilson III

If you haven't noticed, most lenders making loans on rental properties and flips based on credit scores, with no income verification, have borrowers sign a document stating that if they owner-occupy the property, they will be foreclosed on.

Why do you think they do that?

Because of the Dodd-Frank law passed after the 2008 real estate meltdown.

You may want to look into that BEFORE you provide any seller financing to a buyer that plans to occupy the property.