Seller Financing - Real World Deal
So I am working with an investor who is looking to owner finance a rental. This is my first time using this approach and have some questions. I want to ensure that I am understanding the deal correctly.
Purchase Price: $140,000
Down Payment: 10% ($14,000)
Interest Rate: 5%
Balloon Payment: "1 year Balloon payment of balance".
Rent for area: $1,400 / month
Taxes: $4,000 ($335/month)
Questions:
1. What is "1 year Balloon payment of balance"? Would it be 12 months of P&I = $671.56 x 12 = $8,058.712
2. When determining "cash on cash return" how much should I factor into deal for closing costs (attorney fees) etc.
3. Any other factors that I am overlooking when dealing with seller financing? I want to make sure that I am looking at the numbers correctly before determining cash flow and cash on cash return.
4. Advice would be appreciated. This deal doesn't look good right now but may be a starting point in the negotiation.