OfflineOk ok ok... Can anybody please explain the owner financing strategy? I thought it was basically identical to subject-to, but I see it can get a bit more complex when the owner creates an interest rate. Can someone plae break down owner financing? Much appreciation.
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Pure owner financing is when the seller owns the property free and clear, Subject To means the seller still has a mortgage with the bank, and you'd be making payments to the seller, who in turn makes their normal monthly mortgage payment to the bank (Subject To is more complicated in other words).
I haven't done any Subject To Deals but have bought using pure owner financing, a few times. There can be some great deals if you can locate them!
The process is pretty simple: assuming the numbers work, I made a downpayment, and the rest of the purchase price is a note. I then made monthly payments to the seller. An attorney handled the note creation and the close.
Main recommendations: get the property appraised before you close, so you know you're not overpaying. Also be careful about balloon payments at the end. Go out at least 5 years, and the more time you can negotiate, the better. One of my deals is a full 30 year note.
Hope that helps!
- Tom