Author Topic: Owner Financing  (Read 1658 times)

SharperDingaan

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Re: Owner Financing
« Reply #10 on: June 24, 2020, 05:57:05 AM »
LISTEN to what you are being told. The lawyer, & the accountant are BOTH saying walk away ....
Professionals they were hired 'cause they know this business - they both say no, and a lot of money was paid for that advice.

A 'clean' sale, means just that - clean. Buyer/seller pay the money TODAY, exchange the title TOTAY, and walk away - never to see each other again. The seller gets 100% cash, and is NOT in the financing business - it's why we have banks. It smells like this is a forced seller that needs a quick sale - offering inducements to both get a sale, and at the highest price possible.

A vendor take-back is not a bad thing IF you need the sellers ongoing involvement for a time.
Buying an apartment block, or a business, etc. - where there is a need for operational transition. If you're just buying a house to live in? .. not so much.

SD




bizaro86

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Re: Owner Financing
« Reply #11 on: June 24, 2020, 09:33:20 AM »
LISTEN to what you are being told. The lawyer, & the accountant are BOTH saying walk away ....
Professionals they were hired 'cause they know this business - they both say no, and a lot of money was paid for that advice.

A 'clean' sale, means just that - clean. Buyer/seller pay the money TODAY, exchange the title TOTAY, and walk away - never to see each other again. The seller gets 100% cash, and is NOT in the financing business - it's why we have banks. It smells like this is a forced seller that needs a quick sale - offering inducements to both get a sale, and at the highest price possible.

A vendor take-back is not a bad thing IF you need the sellers ongoing involvement for a time.
Buying an apartment block, or a business, etc. - where there is a need for operational transition. If you're just buying a house to live in? .. not so much.

SD

Lawyers and accountants that do residential real estate are some of the most risk adverse people alive, and are often not good at evaluating risk-reward, in my experience.

The right question for the lawyer isn't "should I go this" the right question  is, "what is the range of legal costs and time elapsed to complete a foreclosure in this jurisdiction"

Then evaluate the risk-reward using that information. If there was a cash deal on the table at a similar price great, take that. But I doubt that's true. And that makes the true return on the 1st mortgage effectively higher.

Pelagic

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Re: Owner Financing
« Reply #12 on: June 24, 2020, 12:41:01 PM »
Thanks for the help everyone. Some good points and options have been raised. Part of the reason I asked here rather than simply following along with the advice of the lawyer and accountant is that neither gave a case specific outline of the risk. Just a general this is what can happen and why owner financing isn't recommended. Yes there's some risk, but there's also the cost of maintaining the property waiting for another offer. Personally I thought the deal seemed attractive, especially given that even if in some scenario where the house is rendered worthless similar lots have sold for roughly 60% of the price.

I will look into potentially reselling the note, that seems like it may be the easiest course. And will be sure to ask what the cost/timeframe of a foreclosure process is.

bizaro86

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Re: Owner Financing
« Reply #13 on: June 24, 2020, 01:29:41 PM »
If you're looking to sell the note, I'd contact some hard money lenders and see if they'd buy it from you. The listings at the bigger pockets forum have numerous hard money lender ads.

https://www.biggerpockets.com/forums/517-marketplace?page=1