Anyone know anything about seller financing on homes?
08-19-2007, 10:56 PM
#1
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Location: Stuart, FL
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Here's what I'm thinking. Figure I will need a real estate attorney to do this. But let's say I pay off the house, then turn around and sell it to a buyer with less then perfect credit. I finance the loan, they pay all the taxes insurance, etc, etc and the loan to me. I charge them a fairly high interest rate as they don't have perfect credit.
I figure even if they can't make the payments, a year, two years... etc... (worst case) I can forclose, gut the ****** if need be and get it back on the market. Much llike having rented it for two years but for a hell of a lot more per month. The only issue is I'll good chunk of cash tied up in the note for what could be 30 years, although it would make sense for them to refinance down the road when their credit has improved for a lower rate.
Obviously I would need to have an attorney write a contract, set up an escrow account and what not, but it would appear to me, that since u cannot sell a house in this market and even renting it seems easier said then done, this may be a way to get myself a decent return on my investment, sell the house and worst case end up with it again.
I figure even if they can't make the payments, a year, two years... etc... (worst case) I can forclose, gut the ****** if need be and get it back on the market. Much llike having rented it for two years but for a hell of a lot more per month. The only issue is I'll good chunk of cash tied up in the note for what could be 30 years, although it would make sense for them to refinance down the road when their credit has improved for a lower rate.
Obviously I would need to have an attorney write a contract, set up an escrow account and what not, but it would appear to me, that since u cannot sell a house in this market and even renting it seems easier said then done, this may be a way to get myself a decent return on my investment, sell the house and worst case end up with it again.
08-20-2007, 07:02 AM
#2
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Location: Amityville, New York
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I dont know what the laws are in Florida, but to evict someone here can take 6-8 months.
So unless you can afford the house while they are in it then I dont see the drawback.
You better get EVERYTHING in writing too.
Maybe think about a rent with option to buy deal, this way if the people are ********* you are not stuck with them, give them
a trial period so to say?
So unless you can afford the house while they are in it then I dont see the drawback.
You better get EVERYTHING in writing too.
Maybe think about a rent with option to buy deal, this way if the people are ********* you are not stuck with them, give them
a trial period so to say?
08-20-2007, 07:18 AM
#3
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Originally Posted by Rob x-7' post='880737' date='Aug 20 2007, 08:02 AM
I dont know what the laws are in Florida, but to evict someone here can take 6-8 months.
So unless you can afford the house while they are in it then I dont see the drawback.
You better get EVERYTHING in writing too.
Maybe think about a rent with option to buy deal, this way if the people are ********* you are not stuck with them, give them
a trial period so to say?
So unless you can afford the house while they are in it then I dont see the drawback.
You better get EVERYTHING in writing too.
Maybe think about a rent with option to buy deal, this way if the people are ********* you are not stuck with them, give them
a trial period so to say?
I would have to have something built into the contract regarding default, making it much easier to get rid of them if they don't pay thier mortgage. I'm not real familiar with how rent to own works to be perfecty honest.
08-20-2007, 08:53 AM
#4
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Join Date: Apr 2002
Location: VA
Posts: 2,532
There are a few potential headaches, but owning a house you can't sell is a headache too, so why not? Yeah, check laws on eviction. I've heard horror stories of owners not being able to evict.
Definitely need a good lawyer. Use one that is recommended by family, friend, or business associate.
Definitely need a good lawyer. Use one that is recommended by family, friend, or business associate.
08-20-2007, 12:13 PM
#5
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Join Date: Jan 2007
Posts: 39
Just sold a house and I am carrying the note. I feel like there is less responsibility/liability to me than renting. My renters were fine until they wanted out of the lease four months early. It was not pretty.
I got a large enough down payment that it is unlikely the new owners will want to default and have it reposessed. I went with a twenty year loan with a five year balloon payment. In other words my money is really only tied up for five years. They will have to refinance with someone else in five years or if I decide to keep the note I can change the interest.
Buyer is responsible for taxes and insurance. Landlords are responsible for taxes and insurance on a rental.
I also checked the house my buyers were moving out of. They had taken very good care of it.
And yes, I did use an attorney.
Loan caluculaters are available on the net. Just google "Loan calculator". It will figure the loan down to the penny.
Check your tax situation. If you sell the property in less than one year and make a profit you will have to pay short term gain taxes (ouch!).
I got a large enough down payment that it is unlikely the new owners will want to default and have it reposessed. I went with a twenty year loan with a five year balloon payment. In other words my money is really only tied up for five years. They will have to refinance with someone else in five years or if I decide to keep the note I can change the interest.
Buyer is responsible for taxes and insurance. Landlords are responsible for taxes and insurance on a rental.
I also checked the house my buyers were moving out of. They had taken very good care of it.
And yes, I did use an attorney.
Loan caluculaters are available on the net. Just google "Loan calculator". It will figure the loan down to the penny.
Check your tax situation. If you sell the property in less than one year and make a profit you will have to pay short term gain taxes (ouch!).
08-20-2007, 12:19 PM
#6
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Join Date: Jan 2007
Posts: 39
Forgot to mention I sold direct without a realtor, saves six percent.
Also, I had the county attorney do the paper work, about $400 total. If I went through the local Real Estate attorney it would have been several thousand.
The county attorney could not provide Title insrance but I paid for Title insrance when I bought the house. I didn't think I needed it since I know the title is clear and I am carrying the note.
Three Bedroom, two bath on two acres in a GREAT location sold for $70,000. You may get paid better in a big city but I bet you can't touch the housing prices!
Also, I had the county attorney do the paper work, about $400 total. If I went through the local Real Estate attorney it would have been several thousand.
The county attorney could not provide Title insrance but I paid for Title insrance when I bought the house. I didn't think I needed it since I know the title is clear and I am carrying the note.
Three Bedroom, two bath on two acres in a GREAT location sold for $70,000. You may get paid better in a big city but I bet you can't touch the housing prices!
08-20-2007, 01:28 PM
#8
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Location: VA
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Originally Posted by Rotary911Porsche' post='880778' date='Aug 20 2007, 01:19 PM
Forgot to mention I sold direct without a realtor, saves six percent.
Also, I had the county attorney do the paper work, about $400 total. If I went through the local Real Estate attorney it would have been several thousand.
The county attorney could not provide Title insrance but I paid for Title insrance when I bought the house. I didn't think I needed it since I know the title is clear and I am carrying the note.
Three Bedroom, two bath on two acres in a GREAT location sold for $70,000. You may get paid better in a big city but I bet you can't touch the housing prices!
Also, I had the county attorney do the paper work, about $400 total. If I went through the local Real Estate attorney it would have been several thousand.
The county attorney could not provide Title insrance but I paid for Title insrance when I bought the house. I didn't think I needed it since I know the title is clear and I am carrying the note.
Three Bedroom, two bath on two acres in a GREAT location sold for $70,000. You may get paid better in a big city but I bet you can't touch the housing prices!
What the hell third-world country are you living in? My wife and I are looking for a basic 3 or 4 bedroom house on at least 1 acre in a local county with good schools for the kids and we can't touch anything for less than $400k!!!
08-20-2007, 09:00 PM
#9
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Join Date: Jan 2007
Posts: 39
Middle of the oil patch in Texas. Great schools. Great people. Biggest problem is there are no curved roads in the entire county. My 911 is going to waste.
I was jut offered a fixer upper four bedroom two bath in a good neighborhood for 35K.
I was jut offered a fixer upper four bedroom two bath in a good neighborhood for 35K.
08-20-2007, 10:00 PM
#10
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Join Date: Aug 2002
Location: Mike is a Liar!
Posts: 4,848
from driving around the country it makes me really consider movin out to those growing rurals areas in other states.. super cheap prices and lotsa land.. yet here i am paying 1500 a month for an apartment in LA.. lol....