For those interested in investing in real estate but are struggling to obtain a traditional loan from a bank, owner financing could be a viable option. Also referred to as seller financing, buying owner financed real estate is often a great alternative to traditional mortgages and lending. Within owner financing, you can purchase both owner financed land and homes. Seller financed homes is quite clear cut, as the seller of the home is simply taking the place of a loaner or bank. Owner financing land is similar, but the process does vary from that of homes.
Here at Red Enterprises, we're well versed in owner financing, and we can provide you with the information necessary in safely going about owner financing so you can make the right decisions throughout the process. Though the processes of owner financed land and homes are similar, there are a few differences every interested buyer should know. With this, take a moment to learn the ins and outs of owner financed land.
What is Owner Financed Land?
As previously mentioned, owner financed land is quite similar to that of a home. In essence, the seller of the real estate (or land) takes on the role of the lender or the bank. The buyer then must make payments, including interest, to the seller within a predetermined period of time. Though owner financing is fairly uncommon, it presents benefits to both the buyer and seller, and is oftentimes the only means to buying or selling real estate, whether that be due to the seller not finding a buyer, or the buyer failing to obtain a traditional loan.
For the most part, the process of owner financing homes versus the same for land isn't much different. What it does come down to is the ease for both parties and the willingness of the seller. Purchasing land through owner financing is often much easier than with homes. Additionally, because mortgages aren't as easy to acquire when buying land, sellers are typically easier to work with. Though it's said to be easier, interested buyers should still do their due diligence.
Key Considerations for Buyers
As with any type of investing or purchasing of real estate, buyers always need to do their research. In buying owner financed land, you should take into account a few important pieces. First, interest is often higher for owner financing. Though it's an option for buyers who can't obtain a traditional loan, you'll still need approval from the seller. Also, most sellers will require a balloon payment and you'll need to have the finances secured to pay when it comes time. If not, you may lose the money you've paid, as well as the land.
Of course, there are also a number of potential advantages in buying owner financed land. Take a look at the list below:
- Closing costs are often lower for the buyer, as you can avoid appraisal costs and bank fees.
- While there may be some negotiation required, the down payment can often be lower. At the least, it's typically more flexible.
- The entire process of owner financing is much quicker, including closing.
Call Us for Help Today!
If owner financed land seems like a viable option for you, be sure to contact us today. We can help you determine what's right for you and give you the information necessary in making a smart buy. For help, give us a call at 307.213.9095.