Structuring an Owner Finance Property
- have the applicant (potential borrower) fill out a 1003 (mortgage application)
- copy of drivers license
- 2 months bank statements
- 2 months recent pay stubs
- run their D/I (debt to income) ratio. Keep at 0.45 or less meaning their debt cannot be more than 45% of their gross income with the new mortgage payment included
- contact their employers and verify employment
- find a RLO (residential loan mortgage officer) to underwrite (charge $500 to $1,000 to underwrite)
Sample Owner Finance Property Deal #1
- $29,000 sales price with $2,000 cash down. Borrower has decent credit. Mortgage rate at 12% due to lower down payment and lower credit
- 5 year term with a principle and interest payments of $600.60
- Total payments received $36,036 plus $2,000 down payment = $38,036
- Purchased the property for $11,996.93
- net profit over 5 years = $24,039.07
- ROI = 200% and annual return of 60% ($7,207.20 / $11,996.93)
Sample Owner Finance Property Deal #2
- $69,900 sales price with $7,000 cash down and $62,900 mortgage payable over 15 years at 5.50% (decent credit and income)
- Principle and interest payment of $682.63 plus escrow of taxes and insurance $162.03 and loan servicing fee of $30 per month
- Principle and interest over 180 months = $122,873.40
- Servicing fee of $30 over 180 months = $5,400.00
Total payments received $36,036 plus $2,000 down payment = $38,036
- Purchased the property and rehab costs = $33,500
- ROI over 15 years = 367% and annual return of 24.45% ($8,191.56 / $33,500)
Sample Owner Finance Property Deal #3
- Purchased the property for $16,218.44
- Sold for $35,000 with $20,000 cash down (after closing costs costs had $1,723.32 profit not including the mortgage)
- No money into the deal, immediate profit after back to back closing
- Created a $15,000 mortgage at 8% payable over 24 months for a monthly payment of $678.41. Total payments received is (24 months) = $16,2891.84
- ROI = 111% and annual return of 55.55% ($9,002.58 / $16,218.44)
Sample Owner Finance Property Deal #4
- Purchased price (all in) for property for $10,569.30
- $11,200 down, so profitable from the start ($884.74 after closing costs costs()
- Sold for $30,000 with $20,000 mortgage payable over 5 years at 10% for a monthly payment of $424.94
- Total payments received is (60 months) = $25,496.40 plus $884.74 = $26,381.14
- ROI = 250% and annual return of 48.2% ($5,099.28 / $10,569.30)
Sample Owner Finance Property Deal #5
- Purchased price for property plus repairs = $5,657.81
- Sold for $25,000 with $5,000 down (out of pocket $657.81)
- $20,000 mortgage at 9% payable over 5 years $415.17 plus tax and insurance escrow
- Total payments received is (60 months) = $24,910.20
- ROI = 529% and annual return of 88%
For more details on this topic please see our video: https://youtu.be/vBy4EF6EUSQ
- have the applicant (potential borrower) fill out a 1003 (mortgage application)
- copy of drivers license
- 2 months bank statements
- 2 months recent pay stubs
- run their D/I (debt to income) ratio. Keep at 0.45 or less meaning their debt cannot be more than 45% of their gross income with the new mortgage payment included
- contact their employers and verify employment
- find a RLO (residential loan mortgage officer) to underwrite (charge $500 to $1,000 to underwrite)
Sample Owner Finance Property Deal #1
- $29,000 sales price with $2,000 cash down. Borrower has decent credit. Mortgage rate at 12% due to lower down payment and lower credit
- 5 year term with a principle and interest payments of $600.60
- Total payments received $36,036 plus $2,000 down payment = $38,036
- Purchased the property for $11,996.93
- net profit over 5 years = $24,039.07
- ROI = 200% and annual return of 60% ($7,207.20 / $11,996.93)
Sample Owner Finance Property Deal #2
- $69,900 sales price with $7,000 cash down and $62,900 mortgage payable over 15 years at 5.50% (decent credit and income)
- Principle and interest payment of $682.63 plus escrow of taxes and insurance $162.03 and loan servicing fee of $30 per month
- Principle and interest over 180 months = $122,873.40
- Servicing fee of $30 over 180 months = $5,400.00
Total payments received $36,036 plus $2,000 down payment = $38,036
- Purchased the property and rehab costs = $33,500
- ROI over 15 years = 367% and annual return of 24.45% ($8,191.56 / $33,500)
Sample Owner Finance Property Deal #3
- Purchased the property for $16,218.44
- Sold for $35,000 with $20,000 cash down (after closing costs costs had $1,723.32 profit not including the mortgage)
- No money into the deal, immediate profit after back to back closing
- Created a $15,000 mortgage at 8% payable over 24 months for a monthly payment of $678.41. Total payments received is (24 months) = $16,2891.84
- ROI = 111% and annual return of 55.55% ($9,002.58 / $16,218.44)
Sample Owner Finance Property Deal #4
- Purchased price (all in) for property for $10,569.30
- $11,200 down, so profitable from the start ($884.74 after closing costs costs()
- Sold for $30,000 with $20,000 mortgage payable over 5 years at 10% for a monthly payment of $424.94
- Total payments received is (60 months) = $25,496.40 plus $884.74 = $26,381.14
- ROI = 250% and annual return of 48.2% ($5,099.28 / $10,569.30)
Sample Owner Finance Property Deal #5
- Purchased price for property plus repairs = $5,657.81
- Sold for $25,000 with $5,000 down (out of pocket $657.81)
- $20,000 mortgage at 9% payable over 5 years $415.17 plus tax and insurance escrow
- Total payments received is (60 months) = $24,910.20
- ROI = 529% and annual return of 88%
For more details on this topic please see our video: https://youtu.be/vBy4EF6EUSQ
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