Growing Your Property Portfolio with Owner Financing ( Delayed Completions)

I have to admit I hate jumping through hoops of the banks. I saw so many tragedies caused during the last housing crisis in which banks imploded leveraged landlords. Lives were shattered. I personally have lived through 3 real estate recessions and always trying to learn. Myself and my JV partners use the very prudent strategy of sell to buy & keep. We sell professional HMOs in order to keep Social housing HMOs. We are not aiming for 100 properties a year…rather like a turtle…sure and sound.

One way I have grown besides using JV finance is owner held finance. This can be a delayed completion….or simply the vendor holds a first mortgage. When the vendor holds the first charge…not that many hoops to jump through. Actually becomes a win win for everyone. They get monthly income versus putting the money in the bank and getting virtually nothing.

My biggest deal I ever did was over 6 million USD. Shocking the vendor had taken back the property via a foreclosure and just wanted out. Myself and my JV partner put down 10% to control over 13 acres to build 100,000 square feet of warehouse. We had no personal guarantee…no application…no survey…

I personally did not think it was possible but my JV was an older and more experienced gent. He basically said…we will ask for owner finance…if the vendor say yes…Great..if he says no…no problem will purchase for cash. The proverbial if you do not ask…you will not receive. My point is very simple..The power of owner financing is great…Try asking the vendor if they are open to a creative idea. Ask them what they will do with the money with the sale of the property. Always think in the vendors terms. If the money is only going into the bank. Ask them if they want to make a little more money on this property…9 out of 10 times the answer will be yes. With this yes…Ask them if they would be willing to hold finance. You have nothing to lose. Asking does not hurt.

The primary advantage of building your portfolio this way is that you can take advantage of more favorable owner-occupied financing terms. Interest rates on owner-occupied traditional bank mortgages tend to run an average of 1% to 1.5% lower than comparable investment property loans, which can add up to a lot of cash flow over time.