Have you guys got any horror stories on owner financing as I was about to do one but worried about having to forclose someday if they quit jobs or get fired.
Do you guys have any collateral or just their signatures to go on? Thanks This is my first.
I have flipped one house and bought one that I rent and this is my 3rd house that I am wanting to turn over for a profit , need cash for another. Thanks for any help!!
Each state has different laws. In Texas if the term is longer than 24 months you are going to have to foreclose. If the term is shorter than 24 months you just evict. Also the longer the term the less likely the tenant/buyer is going to be able to convert. I don’t “sell” to people with bad credit. I look for people that have a bump on their credit not a total mess. I only give them a 12 month term and will work with them for up to 3 additional months. If they go past that, I kick them out. I also require them to do credit repair with a company I recommend.
The only people I have had problems with were the 2 that had 20 month terms. They just lose focus.
Anyone know how laws in NC work?
I think Owner Financing is an excelant exit strategy. With a LC they put 5+% down so they have some skin in the game, although if they bail then you’d have to foreclose.
With a LO they put less down and usually no foreclosure but it can still be a pain to get them out.
herbster
The more you make them put down the better chance of them following through. People will not risk a large down payment if they think there is a chance they will not see it through. It also keeps them focused on making there payments as they have a lot of cash at stake.
Chris
Can I do this LC even if I still have a mortgage on this prop?
I won’t carry paper unless the property is not financable. Then I want a huge down payment, so the buyer has a lot to lose.
My rule when selling: if the buyer’s credit is good enough for me, it’s good enough for the bank.
My other rule: its a waste of my time to try to sell a property to anyone who doesn’t have the money to pay for it.
The only way I’d carry a down payment (second mortgage) would be if it was money I didn’t need to get for the property. Then if the buyer actually pays, it’s a bonus
Ruready, I don’t know about NC but you can do a LC Note with your current Mortgage.
Tater, I prefer 20% down myself, that gets the LTV around 80% which makes the Note sellable to a Note Investor ( there are more variables ).
A buyer may have good credit but still be unable to get Conventional Financing because maybe he’s a new small busi. owner, new to area, wrong roof pitch or something like that.
As far as seconds go they,re next to worthless unless you want to hold them.
The reason I say this is because Notes are sellable (at a discount) on the secondary market.
herbster
Thanks what does LC stand for?
LC land contract
LO lease option
AITD wrap around
CYA cover your a_s
Thanks but does it cost alot of money and take alot of time to fc? I am learning more on here than my $$$$ boot camp I took>