Carried the note on a house I'd managed nine years, and an insurance quote nearly sank it
I manage other people's rentals for a living and I sold one of my own on my paper this spring. Nine years of owning a plain 2 bed 1 bath, about 900 square feet, three blocks from a school in an average part of town. Free and clear, no mortgage, and I was tired of it being the property I kept putting last.
Terms: 139,000 price, 15% down which was 20,850, note of 118,150 at 8% on a 25 year amortization with a 10 year balloon. Principal and interest 911.71. Escrow for taxes and insurance on top, collected by a servicer.
The part that nearly killed it happened eleven days before closing. The buyer's insurance quote came back at almost three times what she'd budgeted, because the roof is 22 years old and two carriers wouldn't write it at all. She couldn't close without coverage and she'd used most of her cash on the down payment. I wasn't going to drop the price, so we split it: I credited 4,000 toward a roof at closing, she put up the rest, and the contractor got scheduled before we signed so the carrier would bind. Net to me was 16,850 of cash instead of 20,850 and a note secured by a house with a new roof, which I'll take.
What I'd keep. I screened her the way I screen a tenant and then some, because I've read enough applications to know what a thin one looks like, and I added two years of tax returns on top. I used a licensed third party servicer from payment one so escrow is somebody's job. An attorney drafted the note and the deed of trust and it got recorded, and the recording details and disclosure requirements differ by state so that was not a form I was going to fill in myself.
The thing I didn't expect is that insurability is part of underwriting the buyer. A house that can barely be insured is a house your collateral depends on and your buyer can't afford to keep covered.