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Owner Financing Real Estate

In this article, I asked my friend Scott to talk about Owner Financing Real Estate.

Scott is a real estate note investor and is passionate about a few subjects, including owner financing real estate.

I am constantly asking Scott to produce more content because when he speaks on the subject, you can tell by his authenticity that he knows his stuff.

This article is what I am sure is the first of many to come!

Right, Scott?! Feel free to contact me or Scott if you have any questions!

Readers, enjoy.

The Sky is Falling!!!!

The sky is falling in the world of real estate lending as banks, hard money lenders, and credit unions try to recover their distressed financial debt in the wake of COVID-19.

Borrowed money just simply isn’t as plentiful as it was before this virus.

That being said, there is an alternative solution to get more deals done in these uncertain times.

Enter our superhero….

Owner Financing!!!!

Whether you’re a new agent or seasoned pro, you’ve probably heard of FSBOs: For Sale By Owner.

What owner financing allows you to do is to fill the void where conventional bank financing leaves you wanting.

How would you feel if that property you’ve been trying to sell and has been on the market for 90 days finally sells?

What if that property didn’t need to sit on the market for that long? You would be able to get more deals done in a shorter period of time.

You know what that means……

MORE DEALS = MORE COMMISSIONS.

With owner financing, you can sell a real estate property up to 75% faster. This strategy works really well as an alternative to bank financing. Where bank financing fails, owner financing comes to the rescue!

 

5 Reasons To Consider Owner Financing

Why would anyone consider owner financing real estate?

There are 5 major reasons why it would give your seller a HUGE ADVANTAGE.

I'll go over just a few of the good reasons why you, as a real estate agent, might consider suggesting owner financing to your seller.

 

1. Reduced Market Times

When a property sits on the market for over 90 days, the typical action that most real estate agents take is to issue a price reduction.

This causes the seller to lose out on what they hoped to get for their property. It also could hurt the salability of the property.

A price reduction often signals to retail buyers that there must be something wrong with the property. This reduces your target market to real estate investors who are always looking for a deal.

What you get is a property that is priced too high for an investor but too low for a retail buyer to think it’s a quality buy. Owner financing may be your BEST option in this case.

Retail buyers are more than willing to pay full price in exchange for other benefits they get on owner financing.

These benefits include the money they save by not having to pay expensive loan fees, origination fees, and points.

 

2. Increased Inventory of Prospective Buyers

As touched on in #1, Owner financing drastically improves the marketability of a property.

Statistics show that over 40% of the American population doesn’t qualify for bank financing.

That means that, as a real estate agent, you are LEAVING SERIOUS  REAL ESTATE SALES COMMISSIONS ON THE TABLE, by not considering adding owner financing to your arsenal of real estate sales and real estate investing techniques.

Remember those immutable laws of evolution…

“Those who adapt THRIVE, Those who do not DIE.

 

3. Reduced Closing Times

Dealing with a conventional lender can take anywhere from 6-8 weeks to close a sale.

As many of us in the Mortgage Note Industry call this, “waiting on the banks slow ‘NO’”, Conventional lenders have at times declined to fund a buyer shortly before the scheduled closing date.

With owner financing, however, done at a reputable title company, can be closed in a little as 2-3 weeks.

All without waiting on the banks to complete their underwriting process.

 

4. Investment Strategy for Hard-To-Finance Properties

There are many real estate property types out there that conventional banks consider unbankable!

These include mobile home and land, mixed-use property, raw land, non-conforming, and low-value property.

Real estate investors can generate great returns by buying low value or hard to finance property in cash and reselling on owner financing.

Owners of these types of properties can generate a healthy monthly income from selling their hard-to-finance property using owner financing as well!!!

 

5. Interest Income

When a homeowner sells their house in the traditional way, a buyer gets approved for a mortgage by a bank and the bank begins collecting monthly principal and interest payments from the buyer.

Why let the bank GET RICHER?! 

With the right Mortgage Note Strategy, as a seller's agent, you can help your clients literally BECOME THE BANK! 

 

Let's walk through this quick example:

If your seller sells a $100k property on owner financing at 9% interest for 30 years, they will collect a payment of $804.62 for the next 30 years!

AND……they will earn a total of $189,663.20 in interest!

What will your clients think of that?!

They also have the option to sell some or all of those payments for a large sum of cash in the future!!!!

Think about the flexibility your client has for these kinds of deals.

And the best part is……your seller doesn’t need to own their property free and clear to sell on owner financing! More on that in a future “episode!”

This is a topic near and dear to my heart as it allows us, as real estate professionals, to solve more problems, provide more value, and create more profit potential in any market condition.

It gives us more tools in the toolbox to draw from; instead of having a hammer and every problem looking like a nail! Hahaha!

Owner financing gives us the ability to adapt to market conditions and stay ahead of our competition.

Check out these examples by Ryan from BootStrapREI below:

Conclusion

If you are considering owner financing as an option be sure to consult a mortgage note investor or related real estate professional to ensure proper documentation, federal compliance, and attractive terms that provide seller security.

If you are interested in working with me or allowing me to help you, the best way to reach me is through email.

Just send me an email and I will get back to you usually within 24 hours.

Send me your questions and we can address them in future articles with new content. I hope the information I’ve provided has been useful and insightful.

To your success!

DigitalRealEstateStrategy.com, Scott Slackter, Note Investor

Scott Slackter
Note Investor, Asset Manager
Sapien Real Estate Solutions

Email: sslackter@sapienrealestatesolutions.com
Web: https://sapienrealestatesolutions.com
Business phone: 1-833-394-5994
Direct phone: 609-321-3348

 

 

 

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