What interest rates are you getting on owner financing?

I am selling some less-profitable property here pretty quick. One to my tenant, and another to an investor. Haven’t done this for a while, just been buying.

I will be carrying both loans for probably 15 years. I want to exchange being a landlord on those two properties to just walking to my mailbox for the monthly check.

What are you sellers AND buyers seeing in the marketplace on owner-carry financing? What interest rate? What term? Any special safeguards that you write in?

Thanks in advance.

I had one seller who was offering financing at 10% for 10 yrs. We ended up using a bank for that property instead because we were getting 5.65% from the bank. This seller was going to owner finance some of his other properties to us after that deal, but something went wrong… The seller offered this property to us for 22k. We settled verbally on 20k, but never put it in writing. At closing, he thought he was getting 22k from us. I guess that 2k meant so much to him that he never talked to us again.
Sorry I don’t have much experience in this area, but that was the offer we had for owner financing.

be prepared to hold the note forever.

I have an 8.5% 2nd I’ll sell ya. Buyer was supposed to refinance and pay us out in a year. That was 5 years ago.

Just be sure you do the whole deed of trust filed at the courthouse thing. If you ever do have to foreclose, you want to have everything done right.

I just talked to my banker and escrow officer. They are both saying I should carry at 8-10% annual interest. That sounds good to me. Anything I finance will be fully amortized since I am looking for monthly payments rather than cash. But if they want to buy with cash that is great.

The advantages are:
No low appraisal. In fact, no appraisal. Buyer, if you don’t like the price, don’t buy the house.

No termite clearance.

No excessive loan fees. Minimal closing fees.

I only pay tax on profit as it is received. I am not hammered with a huge amount of gain tax profit at closing.

Very quick foreclosure process in this state. If the buyer doesn’t pay, they are sent a notice. The escrow company holds the deed deeding back to me the seller. It will be recorded after the proper number of days. Now I will own the property again and can evict, clean, repair, and re-sell. If necessary.

I can get all that interest like I am a bank. Ever notice how banks have really nice, expensive impressive buildings? Yet they don’t manufacture or sell anything. They don’t sell a thing other than loans. I want a nice impressive building (paid-off home) too. I wanta be a bank.


I also want to start doing some owner financed sales too. My wife has been a little hesitant to make that jump since we do well with rentals and we know that part of the business. I’m anxious to hear how this works out for you.
Good luck with it!

A few things.

Set the interest rate at a level that keeps it affordable rather than cripples the borrower.

Process the payments through a service so there is a clear track record built up. Easier if you find you need to sell the note or the borrower wants to refinance later.

I am not sure the capital gains is handled the way you think. Have you checked with a tax attorney or CPA to make sure you are not going to have to pay the tax on the gain in year one?