Buying Real Estate with Seller Financing in Southwest Florida
Have you considered buying a property with seller financing in southwest Florida? There is available inventory with sellers open to financing in Marco, Naples, Bonita Springs, Estero and Fort Myers.
However, before proceeding in your search, there are a few things you MUST know before proceeding.
What is seller financing?
Seller financing… Also known as Owner Financing. Also known as Seller Carry. This is simply known for a seller of a piece of real estate to essentially be the bank for the buyer / borrower.
Why Would A Seller Provide Financing?
There are many reasons and benefits why a seller would provide financing.
Return On Investment – If they are selling and cash out, maybe they have no place to put their money to get a good return. What is a savings account paying these days? Maybe .5 – 1%? So a seller could potentially get 4-5% or higher rate on their money.
Tough Property To Sell – Sometimes a seller may have a hard property to sell. Or a property in a rough condition that a traditional bank may not finance. This could be an opportunity for a seller to provide financing and get out of the liability and maintenance of the property.
I personally bought a house in Estero Florida with seller financing. The house was not in livable condition. I put 30% down and the seller held paper on the remaining amount. I sold the property a couple years later and the seller was made whole. The seller didn’t have to deal with the property any longer. He also made 4.5 interest on his money over 30 months and then cashed out in the end on the balance owed.
High Interest – When rates increase, sellers are more likely to provide financing. They, in turn, can get a higher price in some cases and also have the ability to qualify more potential buyers who would not necessarily qualify for a house at that price with such a high rate.
What Should You Be Aware Of?
Dodd-Frank – When the market crashed in 2008, new regulations came to fruition due to predatory lending including seller financing. Below you will find a chart to simplify the regulations for you.
To Summarize… If the buyer is an investor or a corporation, then this doesn’t apply. However, if the buyer is intending on living in the property, then review the chart in detail below.
Some buyers may have had issues with their credit in the past. This is a great way to purchase a property if that is the case. However, keep in mind, most seller’s who provide financing will likely want 30-50% down. So you will need some coin in the bank to negotiate.
Hire An Attorney
This chart was provided to us by our real estate attorney. It is imperative to have someone represent you on the buy side if you are considering purchasing real estate this way.
Find Seller Finance Properties
We have dealt with many sellers financed properties over the years in Southwest Florida in Naples, Bonita Springs, Estero and Fort Myers to name a few. If you are considering buying a seller financed property, give us a call! We can do an extensive search for you based on your criteria. Feel free to search on the link below for seller financed properties. Again, you must have some coin in the bank in order to proceed.
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