Author Topic: Help with owner financing a rental property?  (Read 498 times)

kaker

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Help with owner financing a rental property?
« on: September 19, 2016, 08:18:43 PM »
Can someone point me in the direction of any threads on owner financing a rental property or have any experience with this? I have a tenant who wants to purchase the property from me and I am looking for the pros and cons, and how to do it? I have been unsuccessful in using the search bar. Thanks for any help!
« Last Edit: September 19, 2016, 09:43:52 PM by kaker »

rothwem

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Re: Help with owner financing a rental property?
« Reply #1 on: September 20, 2016, 07:31:48 AM »
I haven't every purchased or sold something with owner financing, but I have considered it a couple times.  You should get an attorney to write up the contract with your terms at a formal closing.

Pros:
-Bank's not involved, so the buyer doesn't have to worry about the bank checking credit score.
-Bank's not involved, so the buyer doesn't have to worry about the bank specifying the down payment.
-For the seller, you can usually charge a higher interest rate, which means you make more money.  7-8% interest is not unusual, it can even be higher sometimes.

Cons:
-Bank's not involved, so the buyer doesn't have to worry about the bank checking credit score.  Instead, as the seller, YOU'VE got to worry about checking the credit score.
-Bank's not involved, so the buyer doesn't have to worry about the bank specifying the down payment.  Instead, YOU'VE got to worry about specifying the down payment.
-Higher risk
-You generally need to own the house free and clear to sell with owner financing.  If the bank finds out you sold the house, they can call the loan due and you'll have to pay the balance.