need hard money loan to acquire real estate property, steps to sell to someone who needs owner finance?

[Ruben Zacarias]

Its my first flip and I was wondering if there was a way to owner finance, using Hard Money. I am asking because I have a property set up and an interested party if owner finance is an option.

Thank You!

[Jon Holdman]

No, this won't work. Hard money is a short term loan at high rates. 12-15% is typical. You would then need to charge your buyer and even higher rate.

Now, can YOU buy it with a conventional loan? Then you resell it to this risky buyer? You're the seller so you're the one selling it with owner financing. That's what this buyer is wanting.

Or, is your seller willing to sell it to the buyer as an owner carried deal? Trouble is there's no way to extract a $25K spread out of a deal like that unless the end buyer has $25 in cash. I'm guessing that if they want owner financing, they don't.

Or, you could do a subject to and a wrap. You buy it subject to the existing loan. You take over the payments. Now you sell it to this buyer with a lease option at a higher payment. After a few years, they fix their credit, get a new loan, exercise their option. Then you turn around and pay off the existing loan. Lots of ways for this to go wrong, but it lets you capture your big spread.