Aren't Banks the Only Ones that Finance a Property?
There are perhaps some folks who believe that the only kind of financing that is offered for the purchase of real estate is found through local bank. Such is not the case. The seller finance market is alive and well. While seller financing is always an important niche in real estate, it seems to particularly thrive when traditional bank financing is harder to secure.
In the past five years, over $113 billion in owner financed notes have been originated with creative financing. This includes residential, commercial property, and land where the owner of the property took back a 1st position loan greater than $30,000. That number goes up when second liens are included.This form of private financing is used all across the nation. However, the states of Texas, Florida, California, Arizona, and North Carolina are the ones where seller financing is most common.
Some would be likely to believe that seller financing is only used on ugly houses and low price assets. That is not quite accurate. It might surprise you to know the average balance comes in at $196,926 on residential properties and the average loan to value was 80%.
We are living in a time when traditional bank financing is harder to find than it was 8 or 9 months ago Consequently, I believe that we will see the seller finance market grow in these days. Thanks for reading. Best wishes in your real estate and wealth pursuits.- RLW