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Owner Finance – Pros and Cons of Owner Financing As Seller

Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on the pros and cons of owner financing/seller owner financing… Definition: Owner financing is a loan where the seller in a transaction offers the buyer a loan rather than the buyer obtaining one from a bank. It is also called seller financing. Usually the buyer will make some sort of down payment to the seller, and then make installment payments (usually on a monthly basis) over a specified time, at an agreed-upon interest rate, until the loan is fully repaid or until a new loan in put into place to retire the seller loan. Seller financing is an alternative worth considering when: – The buyer has no cash for a down payment sufficient to qualify for conventional financing – The buyer is simply unqualified for conventional financing – The property is one that conventional lenders will not finance – The property has simply been on the market too long with little buyer activity Owner Financing PROS – Terms of deal are flexible and negotiable – Higher sales price – the seller may be in a position to command full list price or higher – Tax breaks – reporting only the income received in each calendar year – Monthly income – payments from a buyer increase the seller’s monthly cash flow – Favorable Returns – Higher interest rate – owner financing can carry a higher rate of interest compared to other investment types – Shorter listing term – Offering owner

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