All Forum Posts by: Eduardo Cambil

I'm Eduardo, and I'm working with a Texan business partner to set up an LLC focused on acquiring niche, owner-financed properties under $50k. Our strategy is to secure these deals with only a $5,000 down payment on a $50k property, and then quickly refinance the balloon payment using the rental income. We aim to scale rapidly—targeting around four homes per year—so we’re looking for the most efficient way to do this.

Here’s a breakdown of our situation and some specific questions:

1. Owner Financing & Balloon Payments:

   • We’re targeting properties priced around $50k with owner financing, requiring only about a $5,000 down payment.

   • In these deals, there is usually a balloon payment due after a set period (e.g., 5 years). What are typical monthly payment structures under these terms? For example, will we be paying around $600+ per month until the balloon payment comes due, or can the seller structure the note more like a conventional loan (e.g., with lower monthly payments based on a longer amortization schedule)?

2. Refinancing the Balloon Payment:

   • Once the property is acquired and rented out (targeting around $850 per month in rent), is it feasible to refinance the balloon amount with a bank using just the rental income?

   • Or would we need to consider alternative financing options, such as DSCR loans from private lenders offering 30-year terms?

   • What challenges might we face if the rental income is our primary (or sole) source of repayment when refinancing?

3. Scaling Strategy & Documentation Requirements:

   • We want to scale quickly by buying multiple $50k properties. Given that many DSCR loans have minimum loan amounts around $75k and require significant documentation, what are our best options to finance these smaller deals in bulk?

   • Are there creative financing strategies or lenders that have successfully worked with similar scenarios and minimal down payments (around $5,000 per property)?

4. Best Practices & Alternative Approaches:

   • What have been your best practices for negotiating owner-financed deals with balloon payments?

   • Are there ways to structure the financing or the LLC to make refinancing easier, especially if our rental income is our only income source?

   • We’re also open to any suggestions on alternative strategies or improvements that could make our approach more effective and less documentation-heavy.

Our goal is to acquire owner-financed properties under $50k with minimal upfront cash, rent them out, and then refinance the balloon amounts to secure long-term, lower-cost financing. We’re seeking advice on how to refine this strategy, overcome potential challenges, and streamline the process so we can scale efficiently.

Thank you in advance for any insights, strategies, or resources you can share!

Best regards,
Eduardo

Feel free to comment or message me directly with any advice or questions regarding our strategy.

Hey BiggerPockets community,

I've been researching owner financing and how investors use it as a stepping stone to refinance into a 30-year mortgage. Many sellers offer owner financing at high interest rates (often around 12%), but I’ve seen investors buy properties this way, hold them for a while, and then refinance with a bank to lock in a much lower interest rate.

Here’s the strategy I’m considering, but I’d love to hear from those who’ve done it:

Step 1: Purchase the Property with Owner Financing

• Find a seller willing to finance the deal.
• Put down 10-20% and agree to a 12% interest rate for 5-10 years.
• Example: Buy a $55,000 property, put $5,500 down, and finance $49,500 at 12% interest.
• Monthly payment: $710.18.
• Rent out the property for $1,500/month while preparing for refinancing.

Does this sound like how you guys structure your owner-financed deals? Do you negotiate lower interest rates or better terms?

Step 2: Season the Loan & Hold the Property for 6-12 Months

I’ve read that banks won’t refinance a property unless you’ve held it for 6-12 months. During this time, the goal is to:

• Make on-time payments.
• Show strong rental income records.
• Improve the property's value to increase Loan-to-Value (LTV) for refinancing.
• Maintain a Debt Service Coverage Ratio (DSCR) of 1.2 or higher.

How long have you had to hold properties before banks allowed you to refinance? Have you found banks that don’t require seasoning?

Step 3: Refinance with a Bank

Once the seasoning period is over, I’d apply for a conventional or DSCR loan. Here’s what I’ve learned so far:

• Banks lend 75-80% LTV, so they likely won’t refinance 100% of the property value.
• They require LLC documents, rental income proof, and a strong DSCR.
• A new appraisal determines how much they’ll lend.
• If the bank offers 80% LTV on a $55,000 property, I’d get $44,000, meaning I’d need to cover any shortfall to pay off the owner-financed loan.

For those who have done this, have you found banks that offer higher LTVs? Have you been able to refinance 100% of the property value?

Step 4: Lower Mortgage Payments & Increase Cash Flow

If everything works out, the refinance would lower my monthly payment:

• Original owner-finance payment: $710.18.
• Refinanced 30-year mortgage at 7%: $365.
• Monthly rental income: $1,500.
• Cash flow: $1,134/month after refinancing.

Is this the type of strategy you’ve used to transition from owner financing to bank financing? Have you run into roadblocks I should be aware of?

Final Thoughts & Questions

This seems like a solid strategy, but I know there are nuances and hurdles along the way.

✅ What banks have you used to refinance under an LLC? ✅ How do you ensure the property appraises high enough to refinance fully? ✅ What’s the fastest way to refinance after buying with owner financing?

Would love to hear from those who have done this before! What’s worked for you? What challenges have you faced? Thanks in advance!

Thanks so much, really appreciate it, its been very helpful!!

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

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

 That'd be great!!!

That makes a lot of sense, and I completely understand why lenders avoid these smaller loans due to fixed costs and lower yields. The numbers just don’t work in most cases, which is why the closing costs feel disproportionately high.

That said, my goal is to leverage debt to scale quickly, rather than using my own cash on each deal. Since I’m a foreign investor and don’t have access to financing tools like a 401(k) loan or traditional U.S. credit history, I’m trying to figure out what other options are available for financing properties in the $50K range.

If traditional lending isn’t viable, I’d love to hear about creative financing strategies. Does anyone have experience with:

• Portfolio lenders that would finance multiple low-cost properties under a single loan?
• Local banks or credit unions that are more flexible with smaller loans?
• Seller financing or private lenders willing to work in this price range?
• DSCR loans or other investor-focused products that might apply here?

I’d really appreciate any insights or recommendations. For those of you who invest in low-cost properties, how are you financing them efficiently?

That makes a lot of sense, and I completely understand why lenders avoid these smaller loans due to fixed costs and lower yields. The numbers just don’t work in most cases, which is why the closing costs feel disproportionately high.

That said, my goal is to leverage debt to scale quickly, rather than using my own cash on each deal. If traditional lending isn’t viable in this price range, I’m open to creative financing strategies.

Do you (or anyone else here) have recommendations on alternative approaches? Maybe:

• Portfolio lenders who would finance multiple low-cost properties under one loan?
• Local banks or credit unions that might be more flexible on smaller loans?
• Seller financing or private lenders who would work in this price range?

I appreciate the insights—just trying to figure out the best path forward for these kinds of deals!

I totally get that hard money lenders typically focus on short-term loans for quick turnarounds, but my goal is a bit different. I do have the funds for down payments, but since I want to buy multiple deals like this one, I prefer to leverage debt rather than tying up all my capital in just a few properties.

By using financing, I can scale faster, acquire more properties, and maximize returns while keeping my liquidity intact for additional opportunities. If there are any lenders (hard money or otherwise) that offer longer-term financing on lower-priced properties ($50K or less), I’d love to hear about them!

Open to creative financing strategies as well—any recommendations?