deb siems
western washington
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Has anyone who has sold their house to go full-timing carried the contract for the new owners?
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Nascarcruzin
Home is where the RV is parked.
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We carry the note on a property, but did it long before we went ft. Our most recent home is now a rental.
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Yahooligan
Temecula, CA
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Full-timing or not, if you have the ability to carry the note I would definitely do it. I know multiple people that do this, basically ask for low down payment and reasonable interest. If the buyers default then they foreclose on the property and sell it again, carrying the note again with low down. Rinse and repeat. The income of a rental without being responsible for upkeep, repairs and maintenance. 
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Economical Handyman
S. California
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Yahooligan wrote:Full-timing or not, if you have the ability to carry the note I would definitely do it. I know multiple people that do this, basically ask for low down payment and reasonable interest. If the buyers default then they foreclose on the property and sell it again, carrying the note again with low down. Rinse and repeat. The income of a rental without being responsible for upkeep, repairs and maintenance.
The above is how you make trouble free money, best way to go !!!
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smkettner
Southern California
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Yahooligan wrote:Full-timing or not, if you have the ability to carry the note I would definitely do it. I know multiple people that do this, basically ask for low down payment and reasonable interest. If the buyers default then they foreclose on the property and sell it again, carrying the note again with low down. Rinse and repeat. The income of a rental without being responsible for upkeep, repairs and maintenance.
You have not seen a trashed forclosure have you? It can be a good deal but no guaranty.
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Yahooligan
Temecula, CA
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smkettner wrote:Yahooligan wrote:Full-timing or not, if you have the ability to carry the note I would definitely do it. I know multiple people that do this, basically ask for low down payment and reasonable interest. If the buyers default then they foreclose on the property and sell it again, carrying the note again with low down. Rinse and repeat. The income of a rental without being responsible for upkeep, repairs and maintenance.
You have not seen a trashed forclosure have you? It can be a good deal but no guaranty.
There's always risk, that's a given.
Assume a $250k house, $10k down, 4% interest over 30 years, which is basically $1150/mo. Buyer defaults after a short amount of time, say 12 months, that's $13,800 in P+I, plus the initial $10k down, which means you've collected $23,800 on the property in a year. Assuming nominal repairs and reconditioning in order to bring it back up to reasonable condition to sell (Wall repairs, paint, perhaps carpet, and clean-up) you're looking at $5k-$10k tops, but probably closer to $5k or less. Even assuming $10k in repairs, that's still $13800 or a 5% return (assuming you paid $250k for the house and are selling it for the same, which is likely not the case) on your investment.
IMO, there is much less risk doing owner-carry than turning your property into a rental. You have less money up-front from the tenants with a rental, you are still on the hook for any maintenance and repairs, and the tenants can still trash the place. Renters have less to lose if they default on their lease.
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Here'n'There
Texas
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Hummmmmm...... wish I had thought of that! We didn't have a mortgage on our place and (could've, would've, should've) sold and finanaced it ourselves - as it was, we "lost" $$$ selling it outright in a big ole buyers market.
Boy am I going to be smart when I DIE! Oh well....
We'll see ya....................
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M GO BLUE
Southgate, MI
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Sell it on a land contract which means: (1) you still own the house until the land contract is paid off; (2) you retain the ability to still write off the property taxes on your personal tax return (assuming you itemize); (3) should the buyer default you kick them out and start over...
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Rick & Cheryl
Texas
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First you have to ask yourself why a buyer would even need owner financing. Usually it will due to bad credit, lack of a down-payment, or inconsistent income stream. If a mortgage company wouldnt offer the buyer a loan, why would an owner be willing to offer a similar loan?
Offering owner financing can sound like a good deal, but the majority of deals end up going bad. In effect, you as the owner are offering a sub-prime loan, and after the last 3-4 years of the sub-prime debacle, has nothing be learned?
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Yahooligan
Temecula, CA
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Rick & Cheryl wrote:First you have to ask yourself why a buyer would even need owner financing. Usually it will due to bad credit, lack of a down-payment, or inconsistent income stream. If a mortgage company wouldnt offer the buyer a loan, why would an owner be willing to offer a similar loan?
Offering owner financing can sound like a good deal, but the majority of deals end up going bad. In effect, you as the owner are offering a sub-prime loan, and after the last 3-4 years of the sub-prime debacle, has nothing be learned?
That's the beauty of owner-carry, you get the property back and sell it all over again. The owner is not a bank, they are not loaning the money to anyone. When a bank takes on a mortgage they shell out the sale price to the seller, the bank is now out money and won't see it again if the buyer defaults.
Owner-carry has no such thing, the owner is not shelling out $250k to pay off anyone and is not assuming the risk of possibly being out that money. Technically, if the buyer defaults, the owner carrying the loan isn't "out" anything except the time and cost to foreclose and any repairs that are needed, he/she gets the land back and just sells it all over again to someone else.
Apples and oranges for bank vs. owner-carry in terms of cost to the entity assuming the risk.
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