Hey Guys, I’m new to this forum,
I wanted to ask anyone that has experience in Owner finance how to set the final sale price.
I’m looking to get a down payment of 2K and a balloon payment in 3-5 years, I just don’t know how to determine the price of the property now.
There will be equity built up over the next few years, and I’m sure the new owner will demand part of it.
How do you guys normally do this?
It sounds like you are selling the house? If so set the price at fair market value and offer owner financing, that is a plus for the property. I would demand more than $2k downpayment if I were selling and offering owner financing.
Yes, I bought the home two weeks ago for nearly 85k, they wanted close to 100K.
I want to re-sell it, I believe it will be valued at 125K in few years.
What do I sell it for? Today’s value or future market value?
If you were a prospective buyer what would you pay for the house, today’s value or some future value? Probably today’s value, right? What do you think the property is worth; $85k or something more? Look for comparable properties in the same neighborhood that have sold recently to help you determine your sale price.
On a side note; if you think the property will increase in value in the coming years why not hang onto it and just rent it out to offset your mortgage payment?
I agree with 7Tlr. Since you are willing to carry the financing then you can charge a little above market rent. Keep the title to the house over the years and calculate in the assummed appreciation to determine final sale price. It’s like a lease option but now your not the middle man. My advice being the way the market is right now (slow) I would hold on to it and just enjoy the cash flow from it. Remember since you are carrying the financing don’t be scared to demand 3%-5% of the value towards down npayment. Good luck, and Great Investments
I’d offer more like 5-10% down and ask for 10-12% int rate. Balloon in 3-5 years. I’d also use FMV - you usually use future appreciation prices if they aren’t going to actually buy it until the future (i.e., lease/option).