Home Buying in Tennessee>Question Details

Tinakneil, Home Buyer in Knoxville, TN

I need a private investor to buy a property and then do owner financing for me. Is this done If so what are the requirements or How is this done?

Asked by Tinakneil, Knoxville, TN Fri Jan 11, 2013

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Is this a home you have already decided on or are you open to finding a home? If it is a particular home you desire find a real estate investors club in your area, go early to the next meeting and find someone willing to do this. Oh I just noticed you are in Knoxville here is the website for one there. http://knoxrei.com/ Many private lenders go to these events to get their money working for them. With cd's earning them less than 1% many people would like other options.
If you don't have a particular home in mind look on craigslist I see a lot of owner financing homes there. You can also find rent to own and seller financed homes at these REIA meetings.
The person loaning the money generally decides the requirements and there is no set way to do it.
Just make sure you read the agreements or contracts thoroughly. Be honest with them about how much you can pay and don't go over your comfort zone.
0 votes Thank Flag Link Tue Jan 15, 2013
I do not suggest doing lease purchases. There are simply way too many things that can go wrong with one from either side.

In order to do true owner financing, the owner must own the property free and clear of any mortgages. Very few sellers are going to be in that position.

If the property currently has a mortgage on it, the owner cannot legally transfer the title to a buyer without the mortgage first being paid in full. Most all mortgage loans have a due on sale clause. This due on sale clause requires that the mortgage be paid in full should a title transfer occur.

The buyer is also at great risk on a lease purchase transaction should the seller quit making their mortgage payments. Right now, many sellers cannot afford to make their mortgage payments or simply chose not to continue making them. I have seen where the buyer is making their rent payment, but then the owner is not paying the mortgage. The next thing the buyer knows is that the home is in foreclosure. That means the buyer will generally not get back any of the money they have given as earnest money or security deposits.

It is also a big risk on the buyer. If your credit is not where it needs to be now, there is no possible way of you knowing it will be acceptable in a set amount of time.

Before entering into any type of agreement like that, the buyer needs to make sure that they fully understand the potential pitfalls that could arise. Should the seller default on the mortgage, the buyer could lose ALL of the money that they have invested. Until you are able to purchase, renting is generally the safer option.
0 votes Thank Flag Link Sat Jan 12, 2013
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