There are some investors who look for an easy way out with respect to the financing aspect of any property deal. Instead of going to a bank or financial institution or any other hard lender, they look for property where the owner already has part or full control over the equity in that property and which can be thought of as money to purchase the house. In other words, what investors look for in deals where owner financing is involved is that the property owner is willing to accept payments in installments rather than in a lump sum. There are a lot of options in owner financing - the seller can finance the entire down payment amount or only part of it while others can arrange for the funding of the entire property purchase.

An example may clear things up - say you agree to purchase a property for $ 100,000 and the owner is willing to accept $ 80,000 in lump sum cash, which you pay by getting a loan from your bank for the same amount. The owner agrees to accept the balance $ 20,000 in installments, provided a contract is drawn up and various details are written down in black and white - number of payment installments, interest rate, amount to be paid each month, etc.

Owner financing also covers situations where the buyer takes over any existing financing, i.e. the loan amount taken by the current owner and which remains to be paid off with interest, though quite a few states in the US no longer permit this.