BiggerPockets

Scenario:

Seller purchased property (paid cash) about 2 years ago for $180,000.

Present market value of property is about $155,000. and feel I can purchase property at that price.

I'd like to explore and possibly present seller with an offer that would involve them providing financing for the property.

Is there some creative tools or approaches for demonstrating how he would benefit from providing financing as a part of the sale?

One of my mentors always told me to make 3 offers:
1. All cash; usually around 60% of ARV
2. Some cash up front, owner carries the note; usually around 75-85% of ARV
3. No cash, owner carries the note; usually between 85-105% of ARV

I agree with Mitch that you need to know the seller's situation before making the offers, but by coming in with 3 offers as opposed to 1 you have 2 additional offers to fall back on in case they don't like the offer that you think makes the most sense for them.

When I made subject-to offers I made a letter of intent using scenarios similar to what Steve presented above. Sometimes you would get sellers call MONTHS later and say they wanted option number 2...like you remembered who they were ;-)

I can't see ever offering 105% though...not sure what mentor taught you that.

If the seller finances part of the purchase and the amount is small you may try getting a principal only loan. This is subject to imputed tax from the IRS, but it is a great loan! Zero percent interest is nice and many sellers aren't smart enough to realize the time value of that money.

There really is no advantage for the seller getting paid for their equity later so that will be a tough spin. Many people use the tax spin, but that will be tough if he is taking a loss on the property.