Owner Financing

(Louis Rogers) – You’ll be hearing a lot about “owner financing” in the future. Some of these situations will make good business sense, while much of it will not. Many owner carry sales will include underlying 1st and/or 2nd mortgage notes that probably have a due on sale clause. This means that when the property trades the loan should be paid in full. If the loan is not paid in full at the sale, then the buyer and seller will risk the note being called due in the future. Because of this additional risk factor, there will always be a question about how good of a deal you’ve made for yourself. There are instances that this is an acceptable risk, such as when a seller doesn’t have the equity (they can’t cover the selling expense and pay off the existing note), or the buyer can’t qualify for a normal mortgage (not nearly as many can as there was a few years ago). Please be sure that the property value makes good sense before purchasing, and take care to evaluate if the buyer will have the ability to make payments if you sell.