Win/Win Investments Using Owner Financing
Owner financing occurs when the owner of a property is willing to hold a note on a piece of Charlotte investment property that he/she wants to sell. The financing can be for the price of the property in full or a part of it. This is based on the need of the buyer. In the normal course, most sellers would not like to carry a mortgage. But the eagerness to sell the property without much delay as well as preventing a fall in property value often compels sellers to offer owner financing to lure customers.
There is no rule or restriction that owner financing be limited only to traditional residential Charlotte investment property. Indeed, a vast host of property types including land and real estate, commercial property and what have you. Some of the conditions under which owner financing may be concerned include situations when the property is not moving fast in the market or if it is in a rather dilapidated condition. Owner financing is the process where the owner extends credit to the buyer without the intervention or involvement of banks or financial institutions. It has been observed empirically that owner financing is more common among investors as compared to homeowners.
Owner financing means structured deals that are beneficial to both the seller as well as the buyer. It also helps in generating steady cash flow for the seller. The seller acts as the bank or the financing authority with the buyer paying the amount owed over a period of time and in installments as specified in the terms of the agreement signed by the seller and the buyer purchasing the Charlotte investment property. The option to take big or small down payments is vested with the seller, which the buyer needs to comply with.
When it comes to owner financing, the seller generally asks for a higher down payment than mortgage lenders. However, the interest rate would be lower than what a traditional lender would charge on typical Charlotte investment property, where owner financing would come from an entrepreneur's savings.
Interest rates on Charlotte investment property are variable, based upon the Prime rate, with spreads set by financial institutions. Typical spreads are 1.50% to 2.50% over prime, with lower rates to investors with stronger historic debt service coverage. Interest rates of these institutions vary. For getting lower rate, some research work becomes inevitable. Owner financing eliminates this research, as most sellers will agree to a percentage point or more below prime, with a few cases setting up zero interest financing.
If you want to sell off your investment fast and also get a high rate for it, it makes sense to offer owner financing. You may also be able to get first mover advantage and better prices as owner financing makes your Charlotte investment property much more attractive to prospective buyers. At the same time, it could also mean that your property is one of the first ones to get sold in the local property market. All of which makes owner financing a very advisable and popular proposition in times like these. - 23199
There is no rule or restriction that owner financing be limited only to traditional residential Charlotte investment property. Indeed, a vast host of property types including land and real estate, commercial property and what have you. Some of the conditions under which owner financing may be concerned include situations when the property is not moving fast in the market or if it is in a rather dilapidated condition. Owner financing is the process where the owner extends credit to the buyer without the intervention or involvement of banks or financial institutions. It has been observed empirically that owner financing is more common among investors as compared to homeowners.
Owner financing means structured deals that are beneficial to both the seller as well as the buyer. It also helps in generating steady cash flow for the seller. The seller acts as the bank or the financing authority with the buyer paying the amount owed over a period of time and in installments as specified in the terms of the agreement signed by the seller and the buyer purchasing the Charlotte investment property. The option to take big or small down payments is vested with the seller, which the buyer needs to comply with.
When it comes to owner financing, the seller generally asks for a higher down payment than mortgage lenders. However, the interest rate would be lower than what a traditional lender would charge on typical Charlotte investment property, where owner financing would come from an entrepreneur's savings.
Interest rates on Charlotte investment property are variable, based upon the Prime rate, with spreads set by financial institutions. Typical spreads are 1.50% to 2.50% over prime, with lower rates to investors with stronger historic debt service coverage. Interest rates of these institutions vary. For getting lower rate, some research work becomes inevitable. Owner financing eliminates this research, as most sellers will agree to a percentage point or more below prime, with a few cases setting up zero interest financing.
If you want to sell off your investment fast and also get a high rate for it, it makes sense to offer owner financing. You may also be able to get first mover advantage and better prices as owner financing makes your Charlotte investment property much more attractive to prospective buyers. At the same time, it could also mean that your property is one of the first ones to get sold in the local property market. All of which makes owner financing a very advisable and popular proposition in times like these. - 23199
About the Author:
Samantha Preston is a real estate investor who enjoys Charlotte investment properties. Her specialty is real estate in Charlotte, NC.
posted by X - Men @ 12:27 AM
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