Selling REO's on Owner Financed Notes

You should also be prepared to hold a second mortgage for at least 5% of the total sale. This is very similar to a regular loan program called a 90/5/5 or 90% first mortgage, 5% down payment, 5% seller second. This is the least you should go, more preferable is an 80/10/10 in which the first mortgage is for 80%, buyer down payment of 10% and seller second of 10%.

Do not create a note or mortgage with the intent of quickly selling it for full price. The more seasoned the note is, the more you are likely to receive if you do sell at a later date. Also note that flips are not generally a good idea either, check into this before you use owner financed notes as a means to flipping houses.

No reasonable person enters into a seller financed deal with the intention of getting the property back or not getting a lump sum of cash in the future. You must structure your seller financed note or mortgage in a fashion that protects you, you assets and your ability to sell your note at a reasonable price in the future, if needed. A couple of tips: have the note balloon in 5 or 10 years, tell your buyers not to buy anything on credit until their deal has closed, if the buyer cannot afford 10% down, let them make the down payment over time.