Many real estate investors who have a lot of
experience in this line offer owner financing to people who cannot or
will not go to banks and other financial institutions for loans due to
various reasons, because they might have a bad credit history or have
not had time to build a good credit score, self employment, etc. The
deals are rarely for out right financing and there is a lot of
negotiation involved between the borrower and lender. In any case, the
private lender or investor will undertake due diligence no less
thorough than what a bank would do, though the emphasis may be on
different criteria for the one done by the former.
Wholesaling a
deal with owner financing is extremely rare and this kind of investment
needs exhibition of a lot of marketing and selling know how so that you
can justify to the home owner that he or she benefits more from getting
the payments towards the value of their property in instalments rather
than in a lump sum.
Owner financing is rather uncommon in many
countries, where the traditional lenders, such as banks and insurance
companies hold most of the loans that are used for purchasing property.
Those who go in for owner financing have to be very experienced at it
as the chances of the deal coming undone is quite high, even if
everything is contracted for however the greater risks are offset by
the chances of better rewards in the form of profits!