Need Owner Financing Advice!!!
I rehab and flip properties. I am thinking about owner financing my properties on a note and selling my note at closing.Can anyone with experience with this give me the pros and cons of this selling technique.I am hoping I can move my properties faster. Any advice is appreciated. Thanks. Demetrius demetriusmathis@hotmail.com">demetriusmathis@hotmail.com
Robert Allen and some others used to say to sellers...
"Your price, my terms. My price, your terms."
The point as you likely already know is if the financing is not an issue then the seller will more likely obtain a better price.
As someone who buys notes I take a different view. I am all about risk vs. return. One of the greatest factors in the risk is the LTV. Another is the age of the loan.
If you want to sell on something you have rehab'ed and you want to offer financing (to MAX price obtained) then you need to consider if you need all the cash at the close of if you can stagger when you get it. If you need cash at close then you will need to be selling conservative paper. Larger down payments from your buyers, better credit, and better rates.
If you split the funds into two notes or you do something else to that you can season the note then you might see a better price for the note. You will have to leave either your cash or maybe just your profits tied up longer. There is obviously an opportunity costs for doing this.
There is little magic but there are some factors that are more important then others. Rather then list them here I would rather you respond to what I have written so far and then we can take the conversation forward to the next level of detail.
So, any questions so far?
John
[addsig]