Frequently Asked Questions
What is the OwnEZ Financing Program?
Simply put, the OwnEZ Financing Program matches private Investors with pre-qualified Home Buyers looking for financing for qualified move-in ready homes. The Program is designed for Home Buyers who have money for a down payment (10%) and the financial ability to afford a monthly house payment (based on verified income), but are unable to obtain conventional bank financing. The objective is to convert renters into stable home owners who can enjoy the benefits of home ownership, while simultaneously providing an attractive, secure stream of income and return on investment for the Investor.
How does the OwnEZ Program work?
The process begins by a Home Buyer becoming qualified through our Application process, working with one of our licensed qualification specialists. Once approved for the OwnEZ Program, the next step is for the Home Buyer to find his or her home, typically working with a licensed real estate broker, and enter into a Purchase Agreement to acquire the home.
The third step is to match the Home Buyer with an Investor like yourself. Investors can review available OwnEZ transactions and be conditionally matched with the Home Buyer either while the Home Buyer is seeking his or her home or after the home is under a Purchase Agreement.
The fourth step, which we call the “transactional phase,” moves the deal forward to closing once the Home Buyer, Property and the Investor have been matched. The Home Buyer assigns the Purchase Agreement to the Investor. The Investor then closes on the Property and simultaneously re-sells the Property to the Home Buyer at a higher price (typically a 20% mark-up) under a Land Contract.
How are the Home Buyers qualified for the OwnEZ Program?
We have a formal Application process by which our licensed qualification specialists gather Applicant information, verify income (typically by W-2 wage statements, pay-stubs, and tax returns) and verify the Applicant’s prior rental history and other affordability criteria. Once verified, a monthly affordability amount (PITI) is designated. However, again, the Investor always makes the final investment and financing decision.
What are the typical terms of the Contract of Sale?
The Home Buyer pays 10% down of the “Resale price” at closing and 8% interest on the remaining Contract Balance, payable over a 12-year term in equal monthly installments. Monthly payments include principal, interest, property taxes and insurance (PITI), typically serviced through a licensed loan servicing company. “Resale price “is calculated as 20% above the original price the Buyer and Original Seller of property have agreed to.
For the Investor, what are the main advantages of the OwnEZ Program? Put another way, why OwnEZ?
The OwnEZ Program was designed by real estate investors for real estate investors. We have designed our Program specifically for the “buy and hold” Investor who has traditionally focused on rental homes and tenant relationships. The OwnEZ Program offers you a superior structure which provides equal or better returns, but with substantially mitigated risks and management responsibilities. The advantages are many, but chief among them:
- Home Buyers (income qualified) have equity and a growing “stake” in the home, unlike renters. which reduces the risk of vacancy or property damage.
- A more predictable ROI (typical IRR around 10 – 11%).
- Investment is paid back in approximately 6 years.
- Predictable, on-going cash flow during the Contract Term.
- On-going property maintenance & repair is born by the Home Buyer, not the Investor.
- Appreciation (20%) is pre-determined and contractually established at the time of sale.
- Timing of the exit (sale of the home) is pre-determined and contractually established.
- Investors can invest “hassle free” from any place in the world, supported by the OwnEZ platform.
- No on-going property management expenses or hassles.
- Socially beneficial investing: The OwnEZ program converts renters into home owners, allowing them to experience the financial & social benefits of home. ownership, while providing superior, predictable ROI to the investor.
What is the typical size (amount of investment) of an OwnEZ financed deal?
The deal size varies, but the majority of our transactions fall within a range of perhaps $60k to $130k. But as long as the Property qualifies (move-in ready condition) and the Home Buyer is approved for our Program, we have closed deals for as low as $40k.
How long does it take for an OwnEZ financed deal to close?
This can vary, but once a Home Buyer has his or her home under a Purchase Agreement, closing is typically 30-45 days thereafter.
Are OwnEZ deals closed through a title company?
Yes. All OwnEZ transactions are closed in escrow through a licensed title company. At closing, the Investor receives an ALTA Owner’s policy of title insurance and the Home Buyer receives a Contract Vendee’s policy of title insurance. All charges and transaction costs are fully disclosed by standard HUD-1 or settlement statement prepared by the title company. The Investor receives a Warranty Deed, which is recorded together with the Land Contract.
What about Property Inspections or Appraisals? Can I obtain an Inspection and/or an Appraisal of the Home?
Yes. Typically, the Home Buyer obtains, at their expense, a Home Inspection Report by a licensed, independent inspector, a copy of which is made available to the Investor. However, if desired, the Investor can obtain a separate Home Inspection Report and/or an independent Appraisal, at the Investor’s expense. OwnEZ has a number of qualified third-party vendors to whom we can refer you, or you can designate your own inspector and/or appraiser.
What about fees or other costs? What other costs do I need to be aware of to invest in an OwnEZ transaction?
In addition to the purchase price for your Property and standard closing costs, there are two OwnEZ fees which affect the Investor. The first is a $1,500 OwnEZ Investor Fee, paid by the Investor at the time of closing. The second is an OwnEZ Home Buyer Fee, equal to 3.5% of the Contract Price, which is charged to the Home Buyer but financed by the Investor and added to the Contract balance. These two fees, and other closing costs, are typically paid out of the 10% down payment provided from the Home Buyer so that the net cash required from the Investor is less than the Property acquisition price.
What if the Home Buyer wants to sell the home, refinance or simply pay off the Contract early? Is there a pre-payment penalty?
No, there is no pre-payment penalty. However, in lieu of a pre-payment penalty, the OwnEZ structure builds in an appreciation factor (20%) contractually established at the inception of the deal and therefore locked in regardless of when the Contract is fully paid.
What if I later find I need to liquidate my investment, and obtain cash? Am I not locked into an illiquid investment?
Not at all. Essentially, you could sell your Contract (or Note) on the secondary market which purchases performing loans for the stream of income they represent. The loan servicing company where OwnEZ loans are placed offers a brokering service to sell your Contract (or Note), or you could seek out similar brokerage or sale services on your own. One advantage you would enjoy is that you would be selling a seasoned and performing loan, depending on how deep into the Contract term you have held the loan.
Yet another approach, if you wish to continue owning the Property and receiving payments under the Contract, would be to take out a mortgage loan on the Property, which the Contract expressly allows. The only restriction here is that your mortgage loan balance must not exceed the remaining Contract balance.
What happens if a Home Buyer that I’ve financed defaults on his or her obligations?
First, we all hope that this event never happens. And the OwnEZ Program is designed to mitigate that possibility both by the qualification process and by assuring that the Home Buyer is “invested” in the home through his or her down payment and growing equity. However, we all recognize even this risk must be addressed.
In the event of a payment default, there are a series of loan servicing actions that immediately kick in. These include, but are not limited to, late charge penalties, a sequence of Notice(s) of Non-payment and telephone contact. In the event a loan becomes seriously delinquent (defined as 45 days past due), you have the option to authorize the loan servicing company to engage in escalated collection efforts and/or authorize curative agreements with the Home Buyer. The goal here is to return the loan to a fully current and performing status.
Finally, your Contract provides a broad range of legal remedies to allow you regain possession of the Property by foreclosure or forfeiture, and these services are also available through the loan servicing company where most of our loans are placed.
I still have more questions. Where do I go or who do I contact for more information & to get additional questions answered?
Of course. You can go to the “Contact Us” tab on our website or send us an e-mail to firstname.lastname@example.org or call us directly at (888) 55-OWNEZ. We will typically get back to you within one business day, if not before. And we thank you in advance for your interest in the OwnEZ Program!