Owners Holding Mortgages

dreamer

Is it unrealistic to find owners willing to hold mortgages for one to two years on a property?

doctorj

Depends on who's paying all the closing costs etc. Since you usually have to hold 3+ years to make the transaction costs worthwhile in NYC, in normal-paced markets (i.e. assuming you're not renovating to flip during a bubble), it would have to be a pretty special set of circumstances to make someone want to set out with the intention of holding a mortgage less than that.

ben

If you can find a seller who has a lot of equity in a property that they don't need to roll into another property you might be able to do it. This may be the case if you find an elderly seller who has a big house with little to no mortgage and will be downsizing.

However, another element to consider is the tax liability the seller has. Once they sell they will owe taxes on any profit above the personal residence exclusion which means they will need to write a check to the IRS. If they are not taking the proceeds of the sale at sale time they may not be able to pay this.

If they are only holding a 2nd for 10-15% of the sales price this may not be an issue but if you are looking for the seller to hold the majority of the purchase price it may be difficult.