hate to sound like an idiot

howq do you determine if there is equity in a property. i think that is when you pay less than the value is that correct. can someone also explain owner financing


The equity that you have in a property is the difference between what is owed on the property and the value of that property. Purchase price really doesn’t have anything to do with it. For example, let’s say that you pay cash for a property that has a market value of $100,000 for $50,000, You put $10,000 into rehabbing it. Once the rehab is done, you refinance it at 80% of the value (80% loan to value) or $80,000. In this example, your equity is $20,000 or 20%.

Owner financing is simply when the owner finances the property for you. Typically, the owner will own the property free and clear. When you buy it, the owner will sign the deed over to you and you will sign a note/mortgage promising to repay (with interest). The owner acts just like the bank.

Good Luck,


Thanks for the question. Don’t be afraid to ask lots of questions or you’ll learn the “hard way” at some point.

Like propertymanager said, it’s the difference between what you’re paying for the property and it’s current value. Not much to add here.