Banks continue to make it tough for many borrowers, causing some properties to be difficult to sell. One excellent option that many sellers of properties use is offering owner financing, in which there is no bank involved, and the buyer makes the down payment and future monthly payments directly to the seller of the property. The reasons for offering owner financing (creating a real estate note) vary, but include:
attracting more potential buyers
seller wanting to defer taxes on gains
creating more flexible terms and payment schedules
managing sales between family members, or divorce agreements
So, if you are creating a real estate note, here are some tips to maximize the amount that you would receive if you later need to sell it, as well as help protect you if you don’t:
Obtain a good down payment. This means at least 10% for a standard house, and 20-30% for commercial properties, land, and mobile homes.
Sell to a buyer with decent credit, meaning a FICO score of 625 plus.
Ensure that the interest rate being charged on the real estate note is at least as high as comparable bank rates.
If you have questions about structuring your real estate note or would like to discuss the possibility of selling it, feel free to contact me anytime.
Alan Noblitt is the owner of Seascape Capital Inc., which buys real estate notes. He may be reached at (858) 672-4678 or toll-free at 1-800-634-4697. If you would like to learn more about notes and read informational articles, visit www.seascapecapital.com.
If you have questions about structuring your real estate note or would like to discuss the possibility of selling it, feel free to contact me anytime.
