Posted by Dave Hayes on December 20, 2004 at 13:35:40:
Alex,
You can approach sellers by letting them know that (as long as property is in decent to excellent condition - no rehabs) they can sell to you with owner financing with 5-10% down, and either they can structure one note that they can sell at closing for cash proceeds, OR they can structure two notes, one to sell at close and one to hold onto (the 2nd position lien) for cash flow, or they could hold onto both (if the down payment extinguishes any underlying small liens - DP might need to be raised up)
Many possibilities with creative financing. Suggesting that they structure with two liens shows them you are making sure their liquidation options are taken care of, should they want to sell that first lien for cash at a later date, or they can sell it at close.
Is there a “norm” for owner finance? What would be reasonable interest rate to ask for? Is it normaly higher then average market rate? By how much? If there is such thing, what would be the “normal” downpayment for owner finance? I understand that it all depends on particular case, but I just need some pointers where to start from.
Thank you in advance,
Alex.
Posted by Tom-Pa on December 08, 2004 at 14:01:30:
Alex, As far as owner financing goes. Myself I would do a lease option as a seller. When you do this you would advertise “rent to own” down payment needed. When people call ask how much they have. When you do a rent to own you can get top dollar and top rent for the property. You may want to work with a local mortgage broker, some of these people may be able to get financed. Hope this helps.
Tom
Thanks, Tom. I’m sorry, I did not specify where I stand in relation to the question. I actually meant to ask from the buyer’s perspective. As a buyer I could take initiative and ask the seller to owner finance the property, I just wasn’t sure what kind of terms are considered average. How does it compare with the average bank financing, for example?
Thanks,
Alex.