When you’re looking for financing in a town where resources are a bit scarce, you might want to look at an owner-financing option. You might want to purchase an asset that’s in rough shape but has the intention to start from scratch to build it up. Here are some benefits of buying owner-financed land.
Benefits for the Buyer
If you’re buying owner-financed land, you have more power to invest in the property at a monthly rate that you can afford. You don’t have to worry about saving a lump sum of cash to help you get things started. Whether you’re creating an early retirement home or thinking of making several investment properties immediately, you have the flexibility to do it.
You can minimize your upfront capital outlay to help you secure some properties while they can still appreciate.
Streamline Financing Process
Instead of waiting months to get approval from a traditional lender, you avoid the lengthy paperwork and back and forth process to get approved. Also, you can work with the owner to find a rate that would be better for your needs. Some sellers even allow you to finance for low to $0 down.
Be Creative With Structuring the Deal
When getting a traditional loan, everything is by the book. Owner financing can help create a better deal for both parties in terms of interest rate, down payments, length of the loan, and more.
Doesn’t Show Up in Credit Report
The seller may not report the loan to credit reporting agencies, which can be great if you need to get other properties.
Benefits for the Seller
Can Sell the Property In Current Condition
You can sell the property as is to your buyer and avoid making expensive repairs.
Get a Lump-Sum
You can sell the promissory note to an investor for a lump sum. Also, you may get better rates on the money raised from selling your home instead of investing in something.
Keep the Title
If the buyer defaults, you keep the down payment, any money paid, and the property.
Since you don’t have to go through various paperwork like a traditional lender, you can sell the home immediately.
Whether you’re buying a property to invest in for the future or you want to sell it immediately, think about the options you have on the table. Creative financing can be beneficial for both sides of the coin.