Today more than ever, many people do not have traditional sources of employment income. With the job market shrinking, many of us are working for ourselves and are creating jobs by starting businesses and new ventures. With that being said, how does a self-employed individual purchase a residential or commercial location with the stringent financing requirements currently in place?
Simple! Look at properties with owner-financing. What is owner-financing? Owner-financing is when the seller of a property is in a position to act in the capacity of a lender. The seller accepts a down-payment and an agreement for repayment.
The advantages are tremendous and can be a win-win for both parties. Advantages include:
- More favorable rates and terms.
- Easier qualification process.
- Able to sell a property in a depressed market.
- Seller can get a much higher return than other vehicles such as a CD.
- Seller can receive a substantial down payment.
- Tenant can now become an owner.
- Less closing costs.
Now like anything, there are many pros and cons depending on each seller and buyer’s tax consequences and personal financial situation, including whether or not the property is held free and clear. Owner-financing should definitely be a serious avenue to consider when selling a property and when evaluating your lease vs. purchase decision on residential or commercial property.
An attorney is needed to assist in the process and as a buyer, you should still do your homework, via a due diligence period. Whether buying or selling, always evaluate the pros and cons of owner-financing and its impact on your next real estate opportunity.
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