Live and Flip in Raleigh, NC

[Justin Hackney]

Hello Bigger Pockets, 

I am a young guy who is fairly fresh into the corporate world that has a goal to retire by the age of 35!

I know that real estate is a great way to aid in me achieving this goal. However, I can't pull out a conventional loan just yet due to me only having 6 months work, they are looking for at least two. 

There is a property however in Garner, NC that is a 3bd/2ba with all appliances and a sizeable backyard in a very well kept part of town. It's being listed as a owner finance and they fellow selling it seems extremely genuine and good hearted. The price tag is 95,000 and he is asking for 8-10% down and 8-10% interest on what he finances over 20 years. This guy is very flexible as I've already mentioned that I would want a shorter loan period and lower interest rate and he's already swaying my way. 

I also know that I can get at the very least 1,000 a month for this property in rent. IT's very close to NC state and Raleigh, NC so vacancy will be very low. I might even be able to squeeze out more rental income if I get two college kids paying for individual rooms. 

The place is in fair condition and I could add a lot of value to it as I have a little bit of experience managing my families properties in Savannah. 

My question is what are the risk of buying with a owner finance? 

What steps can I take to mitigate this risk? 

The numbers to me make sense. I plan on living in the property for a year before I take out a conventional loan to invest in another property (multifamily) and repeat the process. 

Ps. I don't have the money for a downpayment right now. It will be around 8-9K. However I think I could get some family to pitch in and give them a 15% return on their mini loan. Or would there be a better way to go about the down payment issue? 

Thanks for any feedback. I have thick skin so fire away! 

- Justin 

[Uriah D.]

typically from what I have seen sellers offering the property with owner finacing own it free and clear. If the bank still had a mortgage, he would be selling it sub-to. I would look into a service that escrowed taxes/insurance and then paid the seller the remainder of your agreed to payments. That way you both are assured the money is handled correctly. 

@Justin Hackney