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In-house Financing
Nice n-Easy or Downright Sleazy?
BY BRIAN FLOCK
The Baja coastline is dotted with promotional signs offering "Easy, In-house Financing" to real estate buyers. This type of financing is attractive for buyers when they are dealing with reputable developers who are financially sound. Under those conditions, buyers might want to consider the

advantages of this option. However, in the sometimes
shaky world of Baja real estate, there are a number of risks involved also. Buyers should be aware of the pros and cons of this option before jumping in.
Financially strong sellers usually offer in-house financing for three basic reasons. First, it can be an effective marketing tool to reach potential buyers that might not otherwise qualify
for a loan through US sources. Also, it allows the seller to offer flexible,
customized loans terms that commercial lenders can't match. Finally, it can differentiate a financially
sound seller from a
  smaller competitor who does not have adequate cash to do their own financing.
American buyers using American business logic will think that opting for in-house financing is just a simple cost/convenience decision, which is how it will be marketed to you. The in-house loans are easier to set up than any of the commercial loans. Some in-house rates are now only slightly above the commercial loan rates and up-front closing costs tend to be lower. But wait. There is a downside to some in-house financing
offered in Baja that should cause you to stop and think twice.
There is no problem with in-house financing provide that the seller is financially
sound, with money to cover expenses and cash flow. The challenge is that