First wraparound, looking for some best practices

[Dean Weltman]

I have a rental I've owned for several years that recently and unexpectedly became vacant. I had some major under slab plumbing issues that needed to be fixed, plus the roof was overdue to be replaced, so I decided to go all in and renovate the entire house. I then put the house on the market with a FSBO sign out front and started getting several calls a day. Most of those calls asked about owner financing, and I finally told one caller that I would only consider it with 20% down (on a $140,000 price). To my surprise, the guy said yes, and then I immediately had to start figuring out what I was going to do...

The legal part I have figured pretty well, and I'm having a very knowledgeable attorney in Texas draw up the papers. What brings me here is wanting some opinions on what a reasonable price markup would be for doing the owner-financing, what most consider a reasonable down payment, and what's a reasonable interest rate in this situation...

I didn't mark up the property, though in hindsight I wish I had. I did, however, charge a flat $5,000 'closing fee' and I'm debating 6% for the note at 30 years. The underlying note is a 30 year note at 3.75%. I feel like this is reasonable, and is at a bit of a premium for the extra service I am providing. What does everyone think, too much, too little, or like the third bowl of porridge - just right?