As everyone has heard the mortgage companies have tightened their lending requirements. This latest has made it very difficult for the self employed or business owners to get home financing. These are all the folks in the community you may work with, your realtors, building contractors, store owners, landscaping companies, etc.....
In the past a lot of investors bought rental homes as investments. This brings with it the hassle of the property perhaps sitting vacant between tenants, the upkeep, the taxes, insurance, etc.....
An alternative would be to purchase homes and owner finance to these business owners and self employed. I myself used bank statements last time to prove income. No longer allowed. Most have good credit scores, you could set your standards. You collect the down payment, you have them pay the taxes and insurance all the while collect an interest rate between 6-8%. That is not a bad return. The rental homes in San Antonio for a while were seeing approximately 10% increase in equity each year, but then you had the cost of upkeep, insurance and taxes, etc....Then the cost to sell again.
What happens if they default? You keep the down payment and sell it again. A substancial down payment would be more than a one month deposit on a rental home and a lot less risky as most will probably not default.
In the past I have worked with folks on both sides of this as the realtor. I have these buyers waiting. An investor says yes, they will invest in a home in specific area, price range etc...I then take the buyer out to choose a home within that scope. You can also do this as a one time close saving money on closing costs.
Usually these notes are ammortized for 30 years to make the payments affordable. However you can ask for the note to be balooned if you wish to get your money back in 3-5 years or so. At 3 years the note holder has paid very little principle. So you would have made a lot of interest and they still owe close to what they paid. Which is typical when borrowing from any lender.
Everyone wins.
If you or someone you know would like to invest like this or something similar please contact me. If you are a business owner self employed buyer let me put you on our list.
We must think outside the box these days for ways to make our money work harder. Seems some of the past investments are not profitable any longer.
Also if you are wanting to sell a home and owe nothing and own it outright, this could be the upper edge you could have to make your home more attractive to more buyers.
Contact me today.
karenweger@gmail.com