Owner Financing

I’m a newbie, and I am looking to do my first deal. Due to college and athletics that I was involved in, I couldn’t have a job, so I may not be able to get financing. I now am done with athletics and I have one more year of school. I have a part-time job making approximately 1000/month. I have a expenses of about $350 a month. First of all, should I pursue investing right now, or wait until im out of college?

During my research I have seen much about owner financing, but I am unclear on the specifics of it. Could anybody give me better of an idea on how to find owner financing opportunities, and what exactly owner financing consists of? Are there any book devoted to owner financing? I appreciate any and all responses.

John Wolf


In general owner financing is offered by a person who owns their home free and clear. Some sellers will do a "contract for deed and call that owner financing as well. In a contract for deed, the seller stays on title and mortgage and takes payments from you until you can refinance or pay them off.

As far as starting, it can never be too early. But treat this as a business. You need a plan, a strategy and a focus.

I appreciate the response. I have read books, but at this point I think I have reached the point of diminished returns, and the only way to learn more is through experience. Any more responses would be greatly appreciated.

Another question to go along with my first questions is “Say I find an owner financing deal, what is the next step, what is the proper documentation that needs to be filled out, will I need a lawyer. etcc…” I am trying to find out as much as possible. THanks

I bought my first house with owner financing. It’s a win/win situation for the buyer and seller. The buyer does not have to deal with bank paperwork, underwriting and delays while the seller gets a market rate of return on their note and typically sells the house faster.

Since the seller will be financing your purchase they will require that you sign a note and mortgage. The note will provide details of the financing arrangement including interest rate, monthly payment and term of the loan. The note is also your promise to pay. The mortgage is the security instrument which secures the sellers note with a lien on your house. Typically the title company will manage all of the paperwork, but read everything closely and ensure that you understand all the terms of the transaction.

Owner financing is not the only way. You may qualify for a stated income loan if your credit is good and your financial house is in order.

owner financining is a great way to get started in real estate. It is also a great way to sell property. Try to find property for rent, some people willing to rent will also be willing to sell and get the a monthly payment. It also may let you set the terms of the contract. I have bought and sold on contracts. you can contact me for more info.

I have sold 3 Houses with a wraparound mortgage It might be the way to go but remember the seller has the advantage and yes I sold all those houses more then once till people improved their credit to re-fy

 If you would like to keep more money in your pocket, you can do a first mortgage for 80% of the ask price, then have the owner finance another 15%.  With a seller that is either desperate or savvy to investment strategies, and has the 15% in equity, you can get into the place for 5% down.
 In this pessimistic market, I have found a ridiculous number of sellers that are willing to carry back the 15% on a note with a 5% annual percentage rate on a 5 year due and payable note.  Please keep in mind that a due and payable must be at least 5 years or the primary lender will not approve your loan, and you must pay off or refinance the carryback amount at the end of the 5 year contract.
 Now you will have two monthly payments: one to the primary lender and one to the seller for the amount you owe them x .05 divided by 12.
 For example:
         Duplex cost $100,000                                 Monthly payment
         First morgage on $80,000                           $560 (approximately)
         Payment to seller for $15,000 carryback      $62.50

 You would only need to pay $5000.00 down, and the bank would want to see another $3000 in reserve capital (six months mortgage payments, taxes and insurance) and at the end of 5 years, you would still owe the seller $15,000.
 In my opinion, this is a fairly safe way to get started providing that you have the discipline to save $15,000 over five years or establish credit so that you can borrow the money.
 Do not make the mistake of working hard looking at the funding, but ignoring the screening process.  Always buy below market value and look for any expenses that might come from problems with the property itself (roof, air conditioner, ect.)
 I don't know where you live, but there are a lot of good threads on this site regarding rehabbing and cash flow.  Applying these principals will increase your chances of success.  Also, living in one side of the duplex while renting the other will help you get started with REI in the real world.

Good Luck