Can I rent out a house even if it's not completely paid off?

[Fernando Villareal]

Hello everyone i'm new to BP!!! I am planning to buy my 1st house in San Antonio, Texas once I get out of the military. My question is if I put a down payment on a house say 20% and it's not completely mine yet. Am I able to rent it out to tenants right away?  Or is that illegal in certain states? Or does it need to be 100% paid off? Thank you to those who reply. Cheers

[Robert Naini]

@Fernando Villareal if I understand correctly this is your situation:

- You have a property in mind

- You do not plan on getting a mortgage

- You plan on paying a large down payment to the current owner and the current owner will take payments for the remaining balance

If this is correct, this is called owner financing and it is a great way to buy property

Depending on your negotiation with the current owner, this type of deal could be set up in several ways, I definitely recommend working with a good title company, they can help you and the current owner set up the right documents

yes, you can typically rent out a property purchased like this

And, if necessary, and you qualify for a mortgage, you can go to a bank and refinance the property to pay off the current owner

In this type of a deal, the current owner is holding the mortgage note and you make payments to them, not a bank

You own and operate the property how you want to, and if you don't make your payments they can foreclose and take the property from you because it is your collateral for the loan

Owner financing is part of the private money market, so it doesn't show up on your credit report and tends to work well for most investors, if the terms are reasonable