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How to Make Top Dollar with Owner Finance Investments

Hi, I’m Kristen Grace with Capricorn Mortgage Investments. Today, I’ll share tips on making top dollar through owner finance investments. We’ll cover what owner financing is, how to set up your transactions, and key tips for success.

What is Owner Financing?

Owner financing is selling a property by financing the buyer directly. Instead of renting out your property, you sell it with a mortgage note. This method keeps your cash flow similar to renting but frees you from maintenance, taxes, and insurance responsibilities. You also avoid vacancies, which often leads to higher profits.

Getting Started with Owner Financing

Step 1: Identify the Property

Find a property ready for sale or one needing rehab. You can offer owner financing for any property. Sometimes, it’s beneficial to sell a property needing work to someone in construction, letting them handle the rehab.

Step 2: Advertise Your Property

Use yard signs to market your property. Owner-financed homes sell fast since many buyers struggle to qualify for traditional retail mortgages. To set your terms, determine your interest rate and contract details.

In an owner finance deal, you can be flexible with the term length and interest rate. Aim for 9-10% interest. There’s room to negotiate but ensure you stay profitable.

Step 3: Hire Professionals

  • RMLO: Always use a Residential Mortgage Loan Originator (RMLO) to ensure compliance with state and federal regulations.
  • Attorney: A good attorney is vital for preparing and reviewing documents.
  • Title Company: Close at a reputable title company to ensure all paperwork is legal and proper.
  • Note Servicer: Consider using a note servicer like August REI to handle payments and communications with borrowers.

Setting Up the Transaction

Defining Terms and Creating Notes

When setting up notes, always get a substantial down payment—at least 10%—to show the buyer has skin in the game. Ensure your loan-to-value (LTV) ratio doesn’t exceed 80%. High interest rates (around 9-10%) make your note attractive to potential buyers.


Use standard contracts like the One to Four Family residential contract and the seller finance addendum available at There’s no need to purchase contracts; they are public records.

Use professionals for every step. The buyer pays for services like RMLO fees, closing costs, and note servicing fees. Ensure a legal transfer of ownership with a recorded warranty deed. Avoid land trusts and contract-for-deed arrangements as they complicate title and insurance issues.

Financing Options

  • Conventional Loans: Buy properties with low-interest conventional loans, then wrap a higher-interest owner finance note around it to maximize profit.
  • Friends, Family, and IRA Investors: Consider these sources for financing.
  • Private Lenders and Hard Money: Be cautious with hard money loans as it’s typically illegal to wrap these short-term loans.

Creating a Valuable Note

To create a valuable note:

  1. Demand a good down payment.
  2. Aim for a low LTV, ideally around 70%.
  3. Set a high interest rate (9-10%).
  4. Ensure realistic principal, interest, taxes, and insurance (PITI) payments.
  5. Season the note for 3-6 months.


Owner financing offers a lucrative opportunity for property sellers to maximize their profits while minimizing their responsibilities. By understanding the fundamentals, setting up transactions with professional guidance, and creating valuable notes, you can effectively leverage this method to achieve financial success.

 Remember to stay compliant with all regulations and choose the right professionals to support your transactions. With careful planning and execution, owner financing can be a powerful tool in your real estate investment strategy.

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