First Time Investor: Owner Financing

[Matt Duckworth]

Hello, first time investor here based in Atlanta! I’ve been able to locate a property off market and have been having conversations with the owner for a few weeks. He has agreed to sell me the home, but seems pretty adamant that he wants to do an owner financing deal to help mitigate the taxes on his end which I understand. I’ve run the numbers on the property with the bigger pockets calculator and it seems like a good deal.

I was able to get him to agree to beat the interest rate offered by a more traditional lender, but I’m still skeptical to go down this road, especially with it being my first property.

I’m hoping to hear some of your experiences with owner financing, positive and/or negative. Any feedback would be greatly appreciated. Thanks!

[Brent Coombs]

@Matt Duckworth, I agree with @Marco Bario, you should use an Attorney to represent you.  The only reason I can see that the Seller is bending over backwards regarding the Interest Rate is that you'd be buying at full market value?

ie.  Why would the seller give you a break on both the Interest Rate and actual value?

Unless you're agreeing to a higher-than-normal Deposit?

There are plenty of investors who seek Owner financing deals, so if this deal starts looking too good to be true, perhaps you're missing some other important detail?

eg. How many mortgages/liens already exist against the property?

If the investment numbers look good at full market value, my question is: why?

Is the neighborhood in a non-appreciating area?  Are Rental figures realistic?

Or, do your numbers only show positive cash flow because you'd be "borrowing" significantly less than other Buyers?

Can you share those calculated numbers with us, to see if there are any glaring errors or omissions in your calculations?

Welcome to BP.  All the best...