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1. 

   jasoninmississippi
   

   Apprentice
   Joined: Sep '10
   Posts: 99

   I need some help, I have a rental home that the renter wants to buy from me in 2011. I still owe the bank $23,000, and will have it payed off in 18 months. I believe that the home will appraisal for $75,000. This rental was a forecloser and fixer upper. The renter does the work "fixing up" and I pay for the material. When I bought the home, I had it in my mind to sell it to this renter. I want to carry the paper "note". The renter has bad credit, but he has done work for me for years, and has payed back all loans on time, and great income, but can not handle money. The question is how to structure this deal? I think I can do a option on the house, and then do a promissory note. But I was hoping to do all the legal paperwork at one time. Does anyone have any ideas! Jason

   Posted 2 years ago #
2. 

   Kevin M
   

   Journeyman
   Joined: Jul '10
   Posts: 211

   I stopped at "The renter has bad credit"...

   Are you really willing to play bank here and risk having to foreclose on this guy you have known for a long time? I'd probably offer him a discount on the sales price but make him get a bank loan so you actually get your money. Loaning money (especially large amounts) to family/friends hardly ever works out for the lender.

   Posted 2 years ago #
3. 

   Jeremy
   

   Apprentice
   Joined: Sep '10
   Posts: 64

   I play bank all the time. I've sold 3 cars and a house where I provided owner financing, often to people that can't get a loan from the bank because they have bad credit

   The "worst" example is this:
   I sold a 1998 Nissan Maxima to a guy for $6700, with $1200 down. The best offer I got from anybody else was $6k cash.
   I provided a loan for the delta at several percent above the standard bank rate. I received payments for 9 months before the guy stopped paying. I showed up at his house 2 months later with the spare keys and took it back, drove it for 3 months, and then sold it again after doing a few hundred dollars of work on it. (Based on the total ROI, this is actually the best example in my mind)

   @jasoninmississippi
   Talk to an escrow company and tell them you want to provide owner financing on a property you are selling, so you will need them to create a promissary note and a deed of trust. Generally there are standard forms or they can create them for minimal fees (I paid $80 on a house sale for this.) Make sure you get cash in hand up front, and that monthly payments are made to an escrow account that pays the taxes and insurance.

   Having a fix-it guy in a property you have a note on is a good thing, especially if you have personal experience of receiving on-time payments from him

   Posted 2 years ago #
4. 

   jasoninmississippi
   

   Apprentice
   Joined: Sep '10
   Posts: 99

   @KEVIN - I now that people think,I am crazy to loan money, but I have made more money on loan that are secured with land/cars/mobile homes than the stock market. He has bad credit, but he has great income, on time payment record, and his Wife will kill him if he lose the house. Now unsured loans are horse of a differant color.
   @Jeremy - Thanks for suggestion about using a escrow company. The house still needs work, but it looks a 100% better. Its amazing how a little paint "maybe alot of paint" and a some sheet rock makes it look so much better. Jason

   Posted 2 years ago #

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