Owner financing is very simple.

Owner financing simply means that you don’t go to the bank to acquire a traditional loan to purchase a property – or, really, any item that you’re looking to buy. 

Instead, you contact the person who currently owns the asset (the seller) and ask them to provide you (the buyer) the financing required to complete the sale. 

In other words – you’re on one side and the seller is on the other side. You forgo a bank by striking a deal between the two of you and the transaction occurs 100% within your space.

You give the seller some cash, and they give a note*, and you both agree on the payments that you will make every month. 

*A note in this situation is known as a legal document that establishes the terms of the financing situation between the buyer and the seller.

Owner financing keeps you in control.

Owner financing is a way of making sure that if you don't have 100% of the cash today, you can still gain immediate control over the asset as long as the seller is willing to accept payments over time. 

At the end of the financing term, you will get the title to the asset and the seller will execute a Satisfaction of Mortgage – indicating the mortgage has been paid in full.

Using strategies like this allows you to gain more assets in less time.

Owner financing provides many advantages to the seller.

As for the seller, this strategy often allows them to have many different benefits such as tax advantages and capital gains. 

Of course, before you enter into an owner financing deal as the seller, you would need to check with your competent keyword tax professional to make sure that you will receive those benefits.

Owner financing is a win-win situation. 

Ultimately, owner financing works out for everyone. 

Since the seller has a higher interest rate than normal banks, they earn income from the monthly payments… and the buyer doesn’t have to lay out all their cash up front. 

Most importantly, the process can go as quickly and smoothly as the two parties want since there is no third party involved. 

Not having a third party involved can simplify the process of buying and selling property by eliminating the need for a lender, appraisal and inspection.

Are you ready to learn more about scaling your real estate portfolio?

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