The Benefits of Owner Financing for Houston Investors


Last week, I wrote an article regardingwhy buyers should consider owner financing their properties. This was a follow up to the radio interview onwhy sellers should consider owner financing. Here is a follow up interview regarding why buyers should consider owner financing when purchasing their next Houston property for themselves or as an investment.

Link to the interview: 
April 11, 2013

KP: Welcome back to this final segment of The Price of Business. I am your host, Kevin Price, talking to you about you and your business. Brian Spitz does a phenomenal job every week giving us information and insight in real estate. We’re lucky. We’re not getting him next week, which is unfortunate, but we’re getting him twice this week. Delighted to have you on, Brian, and is the place people need to go to get more information. You can learn both about selling your home if you’re unhappy with it or just ready to move on or to learn about investment deals. He will provide us a seamless approach for businesses—or for individuals to prosper in real estate. Why don’t you go ahead and tell us why you’ve got lined up for us today?

BS: Hey, thanks, Kevin. This is Brian Spitz. I’m with Big State Home Buyers, and what we do is we help individuals sell their properties quickly, and we help individuals who want to get into the investment real estate business matched up with the very best possible deals. Today, what I wanted to talk about is an extension of the topic I did the other day on owner financing. I talked about why a seller or a landlord may want to—owners an (inaudible) property to a tenant buyer. What I want to touch on today is why a renter—I’m sorry, why a landlord may want to buy a property owner finance, so why a real estate investor may want to seek out owner finance opportunities for themselves.

KP: Very good. Jump right in!

BS: So what I wanted to touch on is people don’t have a lot of experience finding owner finance properties. You can find some on the MLS. You can find some advertized in the local papers, but we special in helping people find owner financed properties here at Big State Home Buyers. What that looks like is a lot of times, it’s about taking over somebody else’s mortgage payments or getting a seller who is willing to write a note on their property. We facilitate all of those transactions. What it does for a buyer—it allows him to have a lower barrier of entry into the real estate investment business. So if you don’t have a lot of credit, or if you don’t have a lot of cash and you don’t want to add more debt to your credit report, then we can help you locate an owner finance property where you can basically assume the monthly payments on the mortgage. We look for and offer properties that are at a low interest rate and that have—where you’ll still be able to capture some cash flow on the deals. There’s a lot of benefits to doing owner finance transactions.

KP: Yeah, absolutely. It makes people who otherwise couldn’t could possibly do such be able to do just that.

BS: Uh-hunh (affirmative). Well, one of the other great things about taking over an existing mortgage and—there’s a bit of detail to that that we’re happy to walk people through. There’s a whole page of information on and we also facilitate those transactions with our attorneys and title companies. The great part about taking over an existing mortgage is a lot of times, the mortgages—3, 5, 10 years into the note, so not only are you taking on an investment without having to qualify yourself, but you are also getting into a loan that’s part of the way paid off already.

KP: Right. And as you pointed out last week, the rules are changed quite a bit to help the person who wants to buy this way. It’s not loosey goosey. It really is a deliberate alternative to traditional home buying.

BS: That’s right. It opens the door for a lot of different kinds of people to get into the real estate investment business. You can owner finance a property and then rent it out to a tenant buyer, and the buyer is paying the rent, which is paying the mortgage without ever qualifying for a loan, you can take ownership of a property. You’re getting it paid off with someone who is renting it.

KP: Yeah, absolutely. For the person who is buying it—who’s buying this property in the traditional methodology, is it expected at some point he or she will end up getting a loan—a traditional loan? Or can that relationship just continue indefinitely?

BS: Well, it can be done both ways. It just depends on the needs of the buyer and the seller. A lot of owner finance notes will have a balloon in them, so we may write an owner finance note for you and put a 5-year balloon so that the buyer has to refinance in 3 years or 5 years, so that there is a definite end to taking over the mortgage payments. A lot of people just chose to take over the mortgage until it’s paid off.

KP: Is this approach growing? I know back in the ‘70’s, it was really hot, but I’m wondering because even though rates are incredibly low, getting a loan has become really dumpy (??) a conventional loan. Is this methodology getting pretty hot again?

BS: Yeah, it is. It’s good for people who want to sell their property and they don’t necessarily have enough equity to pay realtors, fix up the house, and do work to the house—for a myriad of reasons, and then for the buyer, we only offer properties that are at a good interest rate and where the payment makes sense or the type of property so that you can gain some cash flow if you rent it out. So we’re only offering deals to our investment buyers that are—that really make sense, so of course you have to weed out—you don’t want to take over a mortgage with an 8-1/2% interest rate. We’ll weed those out, but there’s plenty of really good loans out there with people who are willing to let reliable people take over those notes.

KP: Yeah. You’ll only properties that you’d buy yourself is in the putting, because you’d buy those properties yourself.

BS: Right. Exactly right.

KP: I think that speaks volumes, and occasionally, I don’t care how good anything is. You can have situations where you’ll end up having to sell it yourself. You’re not going to buy into anything unless you know you’re going to make money from it.

BS: Right, and we don’t encourage our clients to make investments—we want to show the buyer, our investment clients, how they’re going to benefit and what their exit strategies are before they get into any investment. For the sellers—people that want to sell property, we really walk them through the benefits and what the transactions going to look like, so everyone that comes to Big State Home Buyers has a really clear understanding of what their exit is going to be.

KP: Yeah, not question about it. You’ve got to know exactly what you’re doing. You could even buy the wrong type of property. You don’t know what you’re doing in the front end. Some homes, because of their size and other factors, are really best for selling rather than for renting, those types of things, correct?

BS: Right.

KP: You’ve got to know that before you go into it.

BS: Absolutely.

KP: All right, we’re talking to Brian Spitz, Check it out. By the way, while you’re there, check the Investors link. It’s there on the navigation bar on the top. There you can see their entire inventory—or actually most of their inventory. It’s very dynamic. You have to look at it all the time. I was looking at a new property out in Huntsville that I found very interesting. You’ve got new property all the time. People need to be keeping up to date with. The thing that’s so shocking is the cost—are such great value. So that’s Brian Spitz—he’s here with us every Monday, but we got lucky this week. We got him twice. We got him here on Wednesday—I mean Thursday, rather. Thanks so much for being with us, Brian.

BS: Thank you.

KP: All right. I hope everyone has a great rest of their day. I hope you spend it, though, right here on this excellent station.

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