owner financing questions - Posted by Barbara (ME)

Posted by Barbara (ME) on April 26, 1999 at 08:10:18:

House and land assessed for $52k. 8 rooms…plus a pantry! (4 bedrooms) and attached barn on nice corner lot 1/2 acre right in village next door to MUCH more expensive houses on both sides. House for sale for 3 years at $55k (houses move slowly here)and (out of state) owner who inherited it will take offer and finance.
Needs repairs but outside of some electric update nothing major.Mainly some glass replacement and cosmetic work.
I am thinking of offering $35k with owner financing and am going to try $0 down.
Built in 1840 with original woodwork, hardwood floors.
Don’t want to be a landlord so might rehab for resale.
We have people from Conn. and NY buy houses here for summer residences, but want a place already fixed up.
I feel market price is $70k and possibly much higher due to 4th bedroom and location.Am very familiar with comps here.

owner financing questions - Posted by Barbara (ME)

Posted by Barbara (ME) on April 25, 1999 at 19:58:00:

If an owner is willing to finance the entire purchase price is it feasible to set up payments on a 15 year mortgage at 8.25% interest?

Re: owner financing questions - Posted by Dave T

Posted by Dave T on April 26, 1999 at 23:30:54:

Not sure that I understand the question. Are you asking whether 8.25% is the “going” rate for an owner financed note?

You have to ask the owner what he expects. Since you don’t want to landlord, why not try to keep your payments low with a 30-year amortization? This will keep your holding costs down a bit while you are fixing and marketing. If you L/O, it should also improve your cash flow.

Give the seller a 30-yr note with a 7-year balloon. Since money market rates are around 4.5% these days, you should have no trouble getting the seller to take anything around 8%. He may even take less if you ask. If you have to put money down to get your interest rate, then get it back in the option consideration from your tenant-buyer.

Re: owner financing questions - Posted by Michael Carr

Posted by Michael Carr on April 25, 1999 at 21:05:54:

There’s simply not enough information in your post to
go by. What is the purchase price? What would the place appraise for? What kind of rents can you get?

If the cashflow looks good, then I’d say yes, this could work.