In a commercial real estate transaction structured with owner financing, the property’s current owner acts as the lender, providing the buyer with a loan to purchase the property. This arrangement bypasses traditional lending institutions. For example, a business owner might sell their office building directly to another company, providing financing terms similar to a bank but tailored to the specific transaction.
This approach can unlock opportunities for both buyers and sellers. Buyers often gain access to properties they might otherwise miss due to stringent bank loan requirements. Sellers, on the other hand, can potentially sell their properties more quickly, sometimes at a premium, and generate a steady income stream through interest payments. Historically, owner-carried financing has played a significant role, particularly during periods of tighter credit markets, offering an alternative pathway to property ownership.
