Seller Financing in High Cost Areas

[Rick Albert]

Hello All,

I keep thinking about Seller financing as it comes up a lot in discussions here in Los Angeles. Here are my initial thoughts:

1. When looking at high cost areas, it's so risky for a Seller to finance a large loan.

2. Even with interest rates in the 5%, it's still very risky for a Seller because in the event of foreclosure, they now have to cover the cost of the foreclosure plus property taxes, insurance, maintenance, etc. 

3. I would imagine most Seller financing requires 20%+ down. So for owner user who wants to put less down I would imagine it is a pass for a Seller.

4. From a tax perspective, assuming there are some levels of capital gains, it might make sense, but again, the perceived risk is so high.

What am I missing? When would it make sense for a Seller to consider financing in this market with low rates.

Thanks!