Pros/Cons for Buyer when Owner Finanching

[Gabriel Haro]

Hello there,

I was told by a friend a couple weeks back that a great way to find properties for sale is to ask friends for their landlords information and ask if they had any properties they were wanting to sell. I did that, and it worked. 

Landlord has a house he is currently leasing but is open to sell after the term ends. However, my current employment is a 1099 (which will not get me approved for a loan unless i have at least two years of 1099 work under my belt) That being the case I want to owner finance and do have enough to give a 10% down. 

How do i convince the owner that it is beneficial for him to finance me the house? What are ways I can negotiate the best deal? I have done some research and I am somewhat familiar but if I am open to new ways to motivate him to finance me the property. He does not want a 30 year note so i proposed a 2 year balloon.

For me as a buyer, what homework must I do to prevent confusion in the future?

Thank you!

Gabriel Haro

Dallas, TX

[Eric H.]

Greetings @Gabriel Haro!!! Congratulations on taking some action and getting a lead. Disclosure: I have never done an owner financed deal but I do present it to sellers all the time. No one has bitten just yet. For one reason or another we just couldn't agree on terms. I don't think convincing the owner to finance the purchase should be your concern. Your concern should be whether or not the owner has any motivation to sell you the house. I would pose the following question to get a sense of motivation: "Mr. Seller, what will you do if you do not sell the house?" I would include in my letter of intent or offer the interest earned in dollars over the course of the loan. This may entice him. Hasn't worked for me yet though. ;-) Negotiating the best deal will boil down to your numbers. If you can get him to make the first move you have a hand up in negotiations. Try to get him to negotiate against himself before making any offer. "Mr. Seller is 100k the absolute minimum you will take for the property?" He may say, "Oh well I might take 80k". He is doing the negotiating for you.

Keep us posted on how this turns out.

I wish you the best!

Sincerely,

Eric H.