I own a property in pa free and clear and am considering selling it with either a lease option or owner finance. Can anyone tell me from sellers point of view witch may be more beneficial?
In addition, considering today’s rates, what interest rate and %down would be considered acceptable if I were to owner finance. Should I insure the property, have the buyer provide insurance or both?
This property needs some work to be made livable so if I did a lease purchase would I have to get a renters license? Is it legal to lease a property in distress?
If you lease-option the property realize that most tennants never exercise their option. This could be viewed as a positive since you keep the lease option fee and can then find another tennant willing to lease-option all over again. But you still own the property and are exposed to the ups and downs of market value, real estate taxes and the like.
Selling the property with owner financing is a good way to facilitate the sale of the plus it gives you a good return on your money and is secured by real estate that you know very well. The rate and terms you charge on the financing will be driven by market demand. Remember you are acting as the bank so you should get a sufficient down payment from your buyer so that you know they have equity in the property and thus care about its value. As for the interest rate; you might get more than say the rate a bank charges since you are not charging points, appraisal fee and other similar typical closing expenses. If you sell with owner financing include a clause in your mortgage/note requiring the buyer/borrower to maintain adequate insurance on the property that has you named as an additional insured party since you have a financial interest in the parcel. You could include a provision for taxes and insurance in the buyer’s monthly payment just so you know these items are getting paid each year.
Good advice from 71tr. If you sell on owner contract have the buyer sign a quit claim deed in your favor at the closing table. file it with the closing agent incase your buyer defaults, then your foreclosure process will be shortened considerably, because you file the deed with the county and evict on default. That is the short version, check local laws.As far as a license to lease/op your state will have a definate answer. If you do it full time and it is your main source of income you may need one, Hope this helps :biggrin
:cool owner finance and make sure your buyer has a fico of at least 560 and get at least 5% down and finally sell for full apprasial then you can sell the note and get just about fullprice about 80% for your note