Do you have a property that you’d like to sell, but it doesn’t meet the requirements of a conventional bank loan? Without the help of bank financing, your pool of potential buyers get reduced, but you still have plenty of options to get your property sold. Properties outside of bank lending requirements can be sold through owner financing.
Here are a few options to help you sell your unconventional property:
Cash buyer. Cash buyers aren’t as common, but they have the capacity to purchase unconventional properties. Properties sold to a cash buyer have a faster closing and can be sold below the asking price. A cash buyer has more flexibility and their purchase is not going to get held up waiting for bank financing.
What are the benefits of finding a cash buyer? You can get a lump sum of cash for your property instead of collecting payments over time.
Owner financing. If you have significant equity in the property that you are selling, you can act as the bank and originate an owner financed transaction with your buyer. With this type of transaction, you will negotiate the terms of sale with your buyer and create a promissory note. The buyer will make their monthly mortgage payment to you with interest and you’ll be listed as the lien holder on the property. Should you have a need for cash in the future, you can sell the remaining balance of the note for cash.
What are the benefits of owner financing? This option will increase your monthly income and provide you with a long term investment that pays an above average return.
Rent to Own. Rent to own options are typically best for slower economies when homes are not being sold as quickly. This works when a seller and buyer agree to rental terms. The buyer becomes the renter and has the option to purchase the property at any time during the lease. However, with an unconventional property, the buyer will not be able to see conventional financing. The purchase would need to be made using cash or owner financing.
During the rental period, you remain as the owner and landlord of the property. When the sale is complete, the buyer becomes the owner and you become the lien holder.
What are the benefits of using rent to own? You get to test out the creditworthiness of your renter before they become the owner of your property.
Whether you are a buyer or a seller, there are still options available to you other than conventional bank financing. If you’re interested in learning more about owner financing and how to set up a valuable note, click the image below to download our eBook:
