I used to be a landlord back in Virginia, but since I moved to TX, I have gained some interesting experiences with owner financing. here in San Antonio, we buy a house for about $50,000 and then owner finance it at 10% to a carefully qualified buyer.
For us it works pretty well. Benefits I have seen:
- cap rate of over 15% - Have two props that have 17% cap rates.
- no repair costs, no property management costs.
- no stress
- Tax/ins are my owner expenses (we use land contract, so house is in my name)
So it works great. But in my experience, you really have to know what you are doing for it to work. For example, you have to know where to buy and not to buy in your city. If you buy in the wrong place, you may have trouble filling the house with a good buyer.
In my experience, with the right mentor and the right location, owner financing is a fantastic buy and hold. I have two and I love it here in Texas.
Have any of you ever tried this where you are? Wonder how well it works in other markets. Thanks!