The concept of owner financing is quite well known in Houston investment property circles. In some cases, potential owners could look for full or part financing based on their specific needs. Sellers generally use owner financing to sell properties at a premium. They also require a mortgage on the property while doing owner financing. While it seems unbelievable that a seller would carry a mortgage, sometimes it is the only recourse. This is because rather than allowing a decline in the value of the property, they would want to facilitate sale by means of owner financing.

When it comes to owner financing, various Houston investment property types in terms of land and other types of real estate can be financed. This means that owner financing is not limited just to traditional homes. Owner financing is also common in situations where a property is in bad shape or else the property has not moved for some time in the property market. Seller financing which is also known as ‘rent to own’ is where the seller holds the note for you, without calling for any bank or credit checks. It is more commonly preferred by those who want to purchase investment property, rather than by homeowners as such.

Owner financing allows you to set the terms, including interest rate and payment terms for your Houston investment property purchase. You are helping the seller while generating steady cash flow; owner financing is creative deal structuring that is a win/win for all parties involved. Owner financing happens when the owner or seller of the property is the one financing the buyer so in this case the owner acts as the bank. The buyer in turn can pay the needed amount monthly or whatever may be the agreement instead of going to the bank for financing. Owner financing can be considered with large or small down payments, it all depends on the term of the contract.

Owner financing is common in a buyer’s market for Houston investment property. In order to protect his or her own interests, the seller may require a higher down payment than a mortgage lender would, but usually at lower interest rates than available from traditional lenders. In most cases, owner financing comes from the entrepreneur’s savings.

Interest rates have spreads that are determined by financial institutions. Generally 1.50% to 2.50% over prime is the general interest rate with those who want lower rates being required to do a lot of research. This is not required in the case of owner financing. In a few rare cases, the owner financing may be even at 0% interest, especially in cases when the seller is very keen on selling the Houston investment property urgently.

Seller financing helps to sell Houston investment properties much faster as it becomes extremely attractive to buyers. This helps in not only ensuring great buyer interest, but also the ability to generate higher price for the property being sold.

Duke Morgan enjoys sharing what he’s learned about Houston rental property especially with people interested in real estate in Houston.