How Does Owner Financing Work? Seeking Guidance as a New Investor

[Eduardo Cambil]

Hey everyone,

I’m new to buying properties through owner financing, and I’d love to learn more about how these deals typically work. I’ve been looking at properties in Texas under $60K that could generate good rental income, but I want to understand the common terms and structures of owner-financed agreements before jumping in.

A few questions I have:

1. Typical Agreement Terms – What are the usual structures? For example, after a percentage down (e.g., 10-20%), how many years are typically negotiated for the remaining payments? Do most sellers prefer shorter terms (5-10 years), or can you actually structure something close to a 30-year term like a traditional mortgage?
2. Interest Rates & Amortization – What kind of interest rates should I expect? Are most deals fully amortized, or do some sellers expect a balloon payment after a certain period?
3. Finding Owner-Financed Deals – Where are the best places to find owner-financed properties that make sense as rental investments? Any marketplaces or direct-to-seller strategies that work well?
4. Avoiding Banks with Long-Term Financing – Are there any deals structured for long-term (20-30 years) owner financing that completely avoid banks? If so, how common are they?
5. Red Flags to Watch For – Any pitfalls or warning signs I should be aware of when negotiating these deals?

I’d love to hear from experienced investors who have structured creative financing deals through seller financing. If you’ve done deals like this or know of opportunities, I’d appreciate any insights!

Thanks in advance!

Eduardo Cambil