Real Investor Match

Actually, that might be the ideal situation. You collect rent on a property you don’t own, pay the mortgage, and keep the difference. Can’t think of a downside.

If the seller holds the mortgage, you are on a contract for deed. This is exceptionally risky for many reasons. The big one is you pay the owner the monthly payment he can’t get by renting the place himself. If you don’t find a renter and can’t make payments, you can be sued in addition to the monies owed for damages to the owner as per the contract for deed you would execute with the owner. The other factor to consider is “why” the owner would want to do this with you unless for some reason he is having difficulty renting the property himself. Maybe you should inquire about that fact. A property management company is a more sensible solution than a private individual. Yet a property management company will not touch a “craphole” place that they know they cannot rent. Think about that fact and ask the owner politely why they are doing this. All rental property, on a regular basis, is in far worse condition for the same period of time compared to primary residential property. It’s a statistical fact. All investment loans are higher risk than primary residential property loans. It’s a statistical fact.
What it amounts to is an owner with an investment property that he or she probably has difficulty renting, is a bad deal for you on contract for deed if your method to make the monthly contract payment is to rent the place yourself.
I can think of many unscrupulous people who would have you believe this is a “great deal.”
So if you want to take an investment property on contract for deed, you are probably getting swindled into dealing with the problem the current owner already has with this property.
Sounds to me like a complete scam; lose this transaction is my advice. Once you sign into it, no matter what is said, only what’s written matters and you will most assuredly be stuck.

If you are familiar with the financials of the property and know what you’re doing, then having the seller hold the mortgage can be great. Not only do you avoid the pain in the neck of qualifying for financing and getting lender approval, but you also have a great remedy if the seller has acted improperly in the sale. For example, if the seller has misrepresented the financials or the property has latent defects that the seller hid, instead of having to sue the seller after the closing and hope to get some money back, you have the remedy of stopping the mortgage payments. Then the seller has to file a foreclosure to get his money and you have the opportunity to present your defenses. He has to sue you instead of you having to sue him.

But you should not be buying this investment property without careful review by an attorney and an accountant before you sign anything.