The stock market continues to retreat. Personal portfolios are dwindling. It is a “buyers market” in real estate. Banks, despite an unprecedented federal bailout, are tightening their lending programs so the average purchaser can’t obtain a loan.
This is the recipe the private mortgage industry was founded on – and it has returned.
With everything going on right now in the real estate marketplace there are two key factors that make this the time for seller financing. One, banks are not lending. Two, investors have nowhere to put their money.
Enter the Private Mortgage.
What if you could invest your money, right now, and get a 10% return? Would you be happy with that? I suspect most people would. Of course the stock market, as we have well seen, has no guarantees backing performance. A private mortgage note, on the other hand, has a very important piece of collateral – the home itself.
More and more people are returning to selling their property using owner financing. The seller collects anywhere from 5%-20% down and charges an interest rate between 8%-12%. That is a great return in today’s market. If they don’t pay, you get the house back and do it all over again.
Enter the “new” buyers.
In the past decade owner financing was used primarily for those buyers with limited, challenged, or poor credit. What is unique about this market is banks are not lending, leaving many “qualified” buyers just unable to get traditional loans. This is great for sellers because they have a much larger pool of potential (can you say pay-on-time-credit-worthy?) buyers.
Sell your home to someone with good credit and receive a nice return? That is a financial recipe for success!