Owner financing can make a property extremely attractive. However, this type of incentive can come with some interesting side effects that you should be aware of. If you properly market and manage your property, owner financing can be one the most attractive and valuable deals on the market.

Owner financing means that the owner of a property is willing to manage the debt for the new buyer. Bill wants to sell his house for 150,000 dollars, for example. He is completely prepared to owner finance. This means if Jane can persuade Bill to give her 150,000 dollars worth of credit, then she will be able to buy the house. Bill takes the payments from Jane. The owner handles the payments on the house.

A mortgage application is not necessary with this type of deal. Bill is probably going to want a big down payment or to check Jane’s credit, but she won’t have to immediately put down 20 percent or have perfect credit. All the terms are up to Bill. However, until Jane finishes paying on her loan, Bill is really the one in charge of making payments on the property.

But, this also puts Bill in a good situation. He will most likely be able to sell this property for more than its worth on the market. Because of this, Jane has fewer buying options than those who go through the banks. She will be paying more because of the owner financing option. Owner financing can really help you flip a house quicker, because in the market today few people are qualifying for credit with traditional lenders.

However, when you are deal with owner financing, you should be very careful. There should be a contract in place to protect Bill and Jane. You need to get a lawyer to help you draw up the right documents. These documents will guarantee that Jane gets the house when her loan is paid. So if Jane defaults on the loan, Bill is still protected.

Owner financing is a great way to attract buyers and make real estate investing and even flipping work in many circumstances regardless of the economy.