Owner owns free and clear....

Got a call from an elderly widowed lady today. She wants to sell and move to her son in FL (from OH). She wants to rent down there. She owns this 22 year old house free and clear. She is saying she wants to sell outright, but I explained that the market is really tough right now and we might need to be more creative. I am thinking she could O/F it to me, I’d L/O it out. I’d try to get her a decent chunk of $ up front, and then her monthly payment until it’s sold. I’d be on title with her as lien holder.

I’m thinking I could give her closer to market value that way (minus repairs of course).

Any input? And what percentage rate would you offer for her to have paid to her?

The rate that you would pay her would depend on many of the same factors that lender financing would - the amout you’re putting down, your credit worthiness, the length of the contract, etc.

Normally owner financing rates are a bit higher than lender financing but the off-set is in flexibility, not officially tying up your credit, and not having the hassles of borrowing from a lender (reduced fees, etc.).

Can you expound any?


I’m just going to see her tonight, so I want to have some ideas ready. I was thinking she’d get $2500 up front (I’d get that from the option$ from the L/O, along with another 1-2k for myself). Then if I was paying her, say $110k for her house, then I’d pay her, $731/month at 7% interest. I would be selling for $120k or something like that, and I’d charge rent of around $950 or $1000/month.

These are all just estimates, but any feedback is appreciated. I’m leaving out the possibility of repairs right now, for discussion’s sake.

Why would you buy for $110K and sell it for $120K? Where’s the profit? By the time you closed and found a buyer, any miniscule profit would be gone.

If your payment to her is $731 a month, how will you cashflow at $950? You’ve got no room to pay taxes, insurance, maintenance, vacancy, etc., etc…

If the house is 22 years old and owned by an “elderly widow”, I guarantee that there are repairs and maintenance to account for.

My two cents, others will offer opinions, too, I suppose.


You’re right, that is not enough room. I was just assuming for the sake of discussion there were no repairs (I know there will be) but that spread between her price and mine to the buyer is not big enough, nor is the monthly cashflow, probably. I also may need a larger option price. Just thinking out loud.

That’s what we’re here for…sharpen your pencil and ‘noodle’ it out some more!