September 8, 2020

How to Properly Set-up your Owner Finance Transaction in 4 Easy Steps

Owner financing is a transaction where a buyer of a property finances the purchase directly through the person or entity selling it. In this transaction, the buyer repays the seller in monthly payments with interest rate as agreed upon.

Below are simple steps on how to properly set-up an owner finance transaction:

Step 1: Identify the property to be sold

You need to make sure that the property is in good condition. You must take into consideration the location and value of the property. You must also assess the downpayment you need to make and the estimated selling price of the property.

Step 2: Advertise for sale

There are a lot of ways to advertise a sale. Advertising can be done through posting yard signs, Craigslist, MLS or through an agent. You need to advertise for sale to find an owner finance buyer for the property. There are dedicated agents who can help you in advertising.

Step 3: Negotiate terms and prepare a contract

The next step is to negotiate a contract. The terms of the contract must include the interest rate, the repayment date or schedule, the manner of down payment and the default consequences. A good contract represents the cause of both the seller and the buyer. For example, you want a good sales price as the seller. However, your buyer wants a lower monthly payment. In such a case, you may agree to stretch out the amortization time since the contract terms must be beneficial to both parties.

Step 4: Hire professionals.

Owner financing must comply with the legal requirements depending on each State. You must hire professionals who can guide you in setting-up the transactions. The professionals you must hire are as follows:

  • Residential mortgage loan originator (RMLO)
  • Attorney
  • Title Company
  • Note servicer

Check our marketplace if you need the services of association, coaches, funding, vendors and note investment!


Kristin Gerst has been a Real estate investor since January 2005. She has invested in multi-family and single family real estate projects. Her professional experiences include acquisition, design, rehabilitation, flips, owner financing, mentoring and investor consulting.

Steve Liang is the Co-founder and CEO of Real Estate IQ. He is a  national speaker and a member of the Real Estate Advisory Board of North Lake College. Some of his achievements include being the REIQ’s Market Leader in Real Estate Intelligence Augmentation; co-founder of Real Estate Deal Finders Meetup, which hosts over 20 monthly real estate networking and deal-finding training in Texas; and a goal-setter and motivational speaker that helps entrepreneurs to unleash their potential and achieve their goals. Steve has spent most of his career practicing leadership, management, marketing and strategy execution

The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.