Seller Finance - Deal Structure Question

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Seller Finance - Deal Structure Question

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Social Media Lead at BiggerPockets · Phoenix, AZ · Member since 2021 · 41 posts · 10 votes

How would you seller finance the following opportunity?

PP: 489k

Down: Seller wants 130k

Term: 7%, 3-5 years

COE: “ASAP”

Seller owes 105k on the mortgage.

This is in Phoenix, AZ near the Arcadia area in a developing neighborhood. I know the area well and the potential appreciation after upgrades is attractive. I’m not sold on the terms, though, and am curious how you would negotiate this deal?

My lucky number is 420k. Wholesaler told me the seller “desperately needs cash asap.” but I’m on the fence about anything I’m told.

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Chris SeveneyBusiness Member

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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

@Felipe Corral Jr.

Why even do seller financing ? It’s 25% down and todays rates? I would just go to a conventional lender.

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Felipe Corral Jr.
Why even do seller financing ? It’s 25% down and todays rates? I would just go to a conventional lender.
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Mwazomela ThurmondBusiness Member
Realtor · Newport News, VA · Member since 2022 · 32 posts · 26 votes
3y
I can see why the seller would need this, but I have to say that the interest rate of 7% is more than I'd prefer. If you went for a conventional loan, not only would you have a loan to cover the appraised value and title insurance, it could save your profit margins if you end up paying what their asking because you can refinance at a lower rate when interest rates come down.
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Social Media Lead at BiggerPockets · Phoenix, AZ · Member since 2021 · 41 posts · 10 votes
3y
Quote from @Chris Seveney:

@Felipe Corral Jr.
Why even do seller financing ? It’s 25% down and todays rates? I would just go to a conventional lender.

Would you consider Subject-To for this deal then?
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OP
Social Media Lead at BiggerPockets · Phoenix, AZ · Member since 2021 · 41 posts · 10 votes
3y
Quote from @Mwazomela Thurmond:

I can see why the seller would need this, but I have to say that the interest rate of 7% is more than I'd prefer. If you went for a conventional loan, not only would you have a loan to cover the appraised value and title insurance, it could save your profit margins if you end up paying what their asking because you can refinance at a lower rate when interest rates come down.

How would you structure this deal for a subject-to deal?
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
Quote from @Account Closed:

Quote from @Chris Seveney:

@Felipe Corral Jr.
Why even do seller financing ? It’s 25% down and todays rates? I would just go to a conventional lender.

Would you consider Subject-To for this deal then?

If the original loan interest rate was low - absolutely.
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Social Media Lead at BiggerPockets · Phoenix, AZ · Member since 2021 · 41 posts · 10 votes
3y
Quote from @Chris Seveney:

Quote from @Account Closed:

Quote from @Chris Seveney:

@Felipe Corral Jr.
Why even do seller financing ? It’s 25% down and todays rates? I would just go to a conventional lender.

Would you consider Subject-To for this deal then?

If the original loan interest rate was low - absolutely.

I appreciate the honesty. I am in analysis paralysis with SubTo and Seller Finance, and just needs to pull the trigger. Any last advice you could give me?
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