Carrying Paper
Hi,
I need to learn more about an option I am considering. The condo I rent is owned by a couple. I would like to offer to buy the condo from them but ask them to "carry paper". This is something that was suggested to me by a friend but I need to learn more about it before I propose this type of option to the owner. I have very little to put down but make good money and have good credit. What do I need to know about this type of arrangement and does it even seem like a viable option?
ag
By having them "carry paper," you are asking them to owner finance the condo for you. So basically they would become the bank. If they're interested in selling but don't need the cash now (i.e. more interested in a monthly cash flow), this may be a good option. If they have a loan that's assumable, you could assume it and have them take back a note for their equity. If it's not assumable you could run into due-on-sale clause issues. There are many ways to structure the deal, but unless sellers have a good reason to take back financing many times they want cash. If you can get them to agree to finance you, it is a good way to buy property with no or little money down.
Thanks,
Other units have been selling for around 425,000.00 so I this would really be the only way for me to pull off buying something in this area (Orange County is ridiculously expensive!!!). So any other details about how to propose this to the owner would be appreciated. Does anyone have any suggestions as to where I can go to learn more about this type of financing (I want to be informed before I bring the idea to them). It just seems silly for me to be paying 1500 a month in rent when I could own something and be creating wealth.
thx