I came across a FSBO, it's fully rented and totals $2550 in rent roll. Seller is a little old lady. She "just wants an offer". The daughter guessed she'd sell for $140k-$150k. After running the numbers it will generate good cash flow. How can I pitch seller financing to this seller? How do most of you on BP do this successfully? What leading questions can I ask her to make this work in her favor? I'd like to pitch a 20 yr term with 5-6% with an opion to pay off early. BUT, My fear is that if she's in her 80's (and this is just a total guess based on her daughter's description of her) is it better to do something like 3-5 years with a balloon? How would that work?
Hello and I hope you came to the right place to get several answers Natalie! I would say that to show her all the reasons of recommendations that she gets like total income and spreading out her income over years may that possibly reduce her income liabilityover several years be attractive enough.
I hit the wrong button again. Sorry. I would not use a 3 or 5 year note that has a balloon payment due at the end. I would rather have a 10 or 15 year bot with a 30 year amortization with a balance paid at the end of that note. 3 to 5 years always comes too quick.
There's something about looking at their advantage on paper works.
I did it again. Sorry. I would ask her what her biggest problem is and try to accommodate it through the financing terms or some other way. If she needs a higher down payment and you cannot pay for it, just create a 2nd note to do that and pay that off in about 5 years. She'll will get what she needs and you'll get to reduce you total payment when that goes away. Her life expectancy will not really matter, because she can't take that money with her when she dies and any heir will be glad to get whatever. I hope some of this helps.
Good luck to you!
Natalie, I just closed on an off market deal last week, and the situation sounds similar. I actually wrote the owner two offers, one was all cash, and the other was seller financing. The seller financing offer was $10k higher than the cash one. I also gave them my Realtor's card so they could call him with any questions about the seller finance option (he did this free for me). Ultimately, she took the cash offer because she was in poor health. Maybe write at least one offer based on the terms YOU need, and negotiate from there? Good luck!
@Natalie Allen I like @Derek Sperzel idea of writing two offers. Also, when presenting the seller financing option explain to her that deferring tax payments also allows her to save more as she's not paying all these high taxes at once! In addition, explain that it works sort like a passive income because the money are coming in monthly without her or her daughter lifting a finger!
Best of luck!