Home Selling in 78237>Question Details

Genevieve, Home Seller in 78237

I am not wanting to deal with a rental property, what is owner financing?

Asked by Genevieve, 78237 Fri Nov 11, 2011

Help the community by answering this question:


Sounds like you don't want to be in the "landlording" position. If that's the case, you've probably considered selling. If you're selling - I'm buying. Just need some particulars on the home, area, etc.
Depending on the home, I may also be able to buy it in "as-is" condition (meaning you wouldn't have to do any more touch-ups or repairs if needed). I can generally close in about 30 days too.
Give me a call.
0 votes Thank Flag Link Sat Jun 30, 2012
Actually... seller financing is only similar in that you will be receiving payments... which I hire a third party to do for me.. a company like Note Collection Services will take care of all of that for you. Worth every penny.

You are earning interest now, front loaded like the banks do. If you carried the note for 30 years, you would earn pretty close to 3 times the value of the home.

My grandfather used to say... "Rich people earn interest, and poor people pay it." Now you get to be the bank making all the money.

And if they don't pay... you foreclose on the property... and sell it again.

But, unlike the landlord... when the toilet does not flush at 2:00am... you won't be getting a phone call. :)

It's not a bad deal at all. It almost makes you wish you had a ton of homes that you are owner financing... doesn't it :)

Jason C Campbell
Option One Real Estate
210-389-5266 .
0 votes Thank Flag Link Mon Apr 23, 2012
You won't obtain enough sound "owner financing" information here to make a decision of this magnitude, so do your due diligence over the internet and if you feel it's necessary, get legal and financial counsel etc. With that said, many investors, including me, buy homes all the time via owner financing or subject to the existing mortgage. The existing mortgage will remain in place and you will still be legally obligated to pay the underlying note(s) on the property even though the properrty is deeded to the new owner. Perfectly legal and is done day in and day out in Texas and across the country. Regardless of the "Due on Sale" or "Transfer of a Beneficial Interest" clause, lenders are not looking to foreclose on performing notes...they have their hands full with non-performing notes and a glut of foreclosures.
Web Reference: http://www.phgbrokers.com
0 votes Thank Flag Link Fri Nov 11, 2011
This is a bit tricky, but there are plenty of folks out there that have done well. The bennies are: You don't have to worry about fixing anything as it is now their property. You can earn some good interest on your equity.

Conns: If they don't pay... it can be costly and emotionally draining to have to foreclose on the property...

So... best bet... Have your buyer put down at least 10% or more, depending on your comfort level... why? That should at least cover the cost of settlement (Title policy, realtors, title / closing fees, etc) and put a little money in your pocket up front... but most important... Most folks wont walk away from a home they put a pretty good down payment on... so it's a little security to make you feel a bit better...

Now.. before you owner finance.... couple of things.

You need to own the home out-right. If you have a loan on the home now... the vast majority of lenders have a "Due on Sale" clause... which means... when you file the documents with the courthouse.. which you HAVE TO DO... this may trigger the mortgage company to call the entire balance due and payable right away... This has been a pitfall that has caused a lot of drama...

I also recommend a third party agency to take care of all of the payments for you.. They do all the billing, keep all the records, and issue the tax statements at the end of the year for you. Worth every single penny! Plus... it doesnt put you in the collections business. Which is not fun.

I would also put a balloon term in the deal... The minimum is 5 years... this way... the current owner either needs to re-finance the home with a third party, or they have to refinance the balance with you... which you can then renegotiate the terms of the remaining balance... usually, folks will raise the interest rate to invite the buyer to get it done with a mortgage company and cash you out.

Some other good things... You can usually get your full asking price or even more as true owner financing is hard to find on nice properties... They usually sell fast, which is always nice.

There is tons more.. but I don't want to write you a book here.. Call me if you need some help... I can walk you through it.

Jason C Campbell
Keller Williams Realty
Web Reference: http://www.SAHomeExpert.com
0 votes Thank Flag Link Fri Nov 11, 2011
Of course, Genevieve, your other option is to hire a strong professional property manager. Here is a link to one of the best in the city: http://www.homelocatorsrealty.com/

They are one of only four companies in san Antonio to hold the Certified Residential Management Company designation.

0 votes Thank Flag Link Fri Nov 11, 2011
Owner financing is not dealing with a rental. If you finance a buyer via owner financing, the buyer takes over on a deed and the seller becomes a lienholder.

For a rental, you are the owner, and simply leases the property to another for the right to use the property.
0 votes Thank Flag Link Fri Nov 11, 2011
If you do not have a mortgage on the house, you can owner finance.
You would decide how much down payment you want, what interest rate and you the buyer makes the payments to you. Let me know if you have any questions,
0 votes Thank Flag Link Fri Nov 11, 2011
Hi, Genevieve,

If you owe money on your home, doing Seller Financing is possible, but tricky. It requires the assistance of a qualified Real Estate lawyer. Typically, you will want at least 20% down, and a bank or note collection service to handle the collection duties for you. If your "Buyer" defaults, you will need to foreclose and evict, and then resell the property. Be sure you get qualified help from an experienced agent. this is now a do-it-yourself project.

good luck,

Doc Stephens, REALTOR®
0 votes Thank Flag Link Fri Nov 11, 2011
Owner financing, means you would become the bank. Meaning, the buyer would make monthly payments to you.
Typically, this is only an option when you own the home free and clear.

Best of luck!
0 votes Thank Flag Link Fri Nov 11, 2011
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