Owner Financing happens when the owner loans the buyer the money to purchase the home.
The buyer then pays the owner a monthly payment, plus interest, until the loan is paid off, generally over 30 years.
The monthly payments provide the owner with long-term passive income each month.
Yes, you can buy and sell houses and create mortgage loans as an investor.
First, owner Financing allows us to start investing in real using a minimal amount of cash and none of my credit and allowed me to build significant wealth in a relatively short period of time.
Because I am not using my cash or credit, I do not have any limits on the number of properties that I can buy and sell. Lenders have limits on the amount of money you can borrower using your personal credit, with this strategy I do not have any of these limits.
Second, owner financing is the only strategy that allows everyone in the transaction to “win” (have their goals and objectives met or exceeded). All other investment strategies require the investor to capture most or all of the seller’s equity, With owner financing, we can pay them close to or up to full fair market value, allowing the seller to keep their equity, while at the same time allowing us to earn long term cash flow.
Third, owner financing is by far the most profitable strategy available. Over the last decade, we have earned an average of 154% profit on every house we buy and sell (yes, can you believe we make more than 100% profit?). We not only collect an average down payment of 12.5% (which is more than most wholesale or fix and flip deals yield), but we also collect thirty years of passive cash flow.
Personally, it makes me feel great just thinking that I am contributing at least a small part of these benefits for my sellers and buyers. I love watching families start dancing in the parking lot right after they have purchased a house – I cannot tell you how satisfying it feels being a part of giving someone that opportunity.
Owner financing transactions allow everyone in the transaction to “win” (meet or exceed their objective
for the transaction). With any other transaction, the investor is looking to buy a significant amount of
the seller’s equity which results in a “win” for the investor and a “lose” for the seller. There is no
judgement about this nature of traditional real estate investor transactions, it is just the nature of
Other real estate transactions rely on only one component of the transaction to make money: traditional equity. Traditional equity is the difference between what I paid for property plus any repairs and or upgrades and what I received when I sold the property.
With owner finance transaction, we rely on all four components of the transactions to make money. This allows us to pay the seller the vast majority of their equity, which allows them to “win” while we earn our money on all four components of the deal, allowing us to “win” as well. Let me explain:
When we take advantage of all four components of profitably, we have historically generated well in excess of 100% profit from every house we have purchased, on average.