Are you tempted to sell your Silicon Valley rentals? Are you interested in reaching a broad range of buyers? Well, despite the housing recovery in most markets, mortgage market is still tight for investment property acquisitions. Banks are still playing hardball when it comes to lending on non-ower homes despite charging higher rates.
So, if you are interested in selling your rental properties in Silicon Valley including San Jose, Campbell, Los Gatos, Saratoga, Los Altos then you might consider seller financing to ease the challenge some buyers have with their loan approval. Seller financing would increase your pool of potential buyers if you finance the sale yourself. There is a great deal of flexibility with payment options, depending on your and the buyer’s needs:
- The down payment can be small.
- Buyers usually pays a monthly fee for the 2nd lien you have on the property for a specified term with a balloon payment due on or before a certain date.
- You can charge a higher interest rate but be careful not to violate your state’s usury laws.
There are typically two typical options to crate a seller financing plan for a real estate deal. One option is for the buyer to agree on a promissory note (detailing the repayment terms) and a Deed of Trust is recorded. The second option is for both parties to enter into a Real Estate Contract (or land contract) which is recorded.
A key distinction between these two options is that with a Note and deed of trust and title to the property transfers to the buyer. But with a real estate contract, the seller retains title until the property is fully paid for. A real estate contract is the preferred option if you are concerned about a potential default where the Buyers might not make the payments on the loan. WIth the Land Contract in place, there is no need for you to foreclose since you are still on title.
Contact Us if you are interested in selling your Silicon Valley rentals?