Owner Finance
Owner Finance or Owner Carry: A Win-Win deal
By BuyIncomeProperties.com
Aug 25, 2006, 01:07

Owner finance makes an excellent choice for those who cannot qualify for conventional loans. It requires very little formality and the closing comes very fast. There is no appraisal, underwriting, survey or other such formalities involved with owner carry. No credit rating, no income-proof, and no strict obligations – owner carry does not ask the buyer to qualify any such criteria. Further, unlike conventional finance, owner finance does not benefit only one party. It brings a win-win situation for both the buyer and the seller. Let me explain to you how does an owner carry installment sale carry advantages for both the party. 

How Does Owner Carry Benefit a buyer?
Owner carry carries a bucketful of advantages for the buyer. Some of the biggest advantages include the following.

Easy Terms and Conditions
When a buyer goes for owner Finance instead of conventional methods of finance, there are reasons for that. The biggest advantage they enjoy is the much easier terms and conditions. Moreover, it is very easy for the buyer to qualify for owner finance, as it requires very little formality. Even if the buyer has a bad credit for one reason or other, they can easily qualify for owner finance. They do not even require submitting any proof for their income. In fact, all those reasons that disqualify a buyer for a conventional finance, has nothing to do with their qualification for owner finance. 

No Additional Expenses
When buyer goes for a conventional loan, they have to pay numerous additional, sometimes hidden, expenses in addition. Such expenses may include origination fees, underwriting charges, appraisal, credit reports, title insurance, etc. Owner Finance does not impose any such charges to the buyer. 

No Third Party
Unlike the conventional finance, the buyer does not need to deal with a third party lender. It takes very little time to close the transaction, and once the transaction is closed, the buyer can move into the property. Where a conventional finance may take months to close the transaction, owner finance finalizes everything within a few days. 

An Opportunity to improve credit Rating
As soon as the transaction closes, the buyer now becomes the owner of a home. This gives them a tremendous opportunity to build up their credit rating. All they require is to make the installments in a timely manner. 

How Does Owner Carry Benefit a Seller?
There is plethora of benefits that a seller can enjoy with Owner Carry. Let me explain a few of those alluring benefits.

Premium Price
Since Owner carry offer the buyer very easy terms and conditions, and it does not even ask them for any strict qualifying criteria. This way, the seller can easily cash in this opportunity by asking for a higher price than that in the market. The buyer too does not mind paying a little higher amount. After all, owner finance carries so many benefits for the buyer that it is very hard for them to refuse to pay more to the seller. 

An easy cash-producing machine
Owner Carry works as an easy cash-producing machine for the seller. Most sellers get the cash in the very beginning, but even if they do not ask for that, the transaction holds many opportunities for them to get cash in future. In comparison to conventional finance, owner finance promises much greater yield for the seller.

An opportunity to save taxes
The owner finance installment sale gives the seller an opportunity to save taxes. This is because the seller is obliged to pay the taxes only up to the extent of the amount of the annual payment they receive. Moreover, if the seller uses his vigilance and combines this opportunity with other tax-saving techniques, such as tax-deferred exchange, it will certainly save some more taxes for them. 

The Transaction takes little time
Since the transaction in owner carry does not involve any formalities, the transaction closes very fast. This results in lesser hassle for the seller and saves their precious time as well. They can invest this time in their other ventures.

Overall, there are a number of factors that gives owner finance installment sale an edge over the conventional finance. It involves less time, less hassle, and more gains for both the buyer and the seller. Again, since both the seller and the buyer enjoys plethora of benefits, owner finance installation sale makes an excellent alternative against conventional finance for both the parties.