Why do people offer seller financing when rents are 2x higher than the payments?

[Ben Bakhshi]

We are approaching some deals that offer owner financing.
As an investor these deals make a lot of sense for buy and hold.

Terms like, 20% down, (prime plus 4.75) 8% interest at 30 year amortization, and interest rate can change after 5 years.
Monthly payments are around $400 a month.
Home can be rented for at least $800 a month.

Just curious because I am finding this almost "too good to be true" despite the high interest rate.

Reasons why I would consider offering owner financing in a sale:
1. I seriously need the down-payment right now.
2. Some other tax related issue that I don't currently understand.

[Carlos Garza]

Ben Bakhshi,
There is more brought to the table than just the cost of the loan. Insurance and Taxes could quite easily eat up another $200-$400 a month. HOA fees could add more. If a property manager is being used, then plan on losing 10% of rent, so $80 a month. To me, the deal already looks like it is a losing scenario.

You could count on appreciation, but if that does not work in your favor you could really be down a lot. More information is needed to make an accurate determination though.

This is just my 2cents. Others with way more knowledge and experience could give you more information.

Carlos