I've never done creative but I'm looking to revive a deal that is stalled on price. The seller lives in the house and rents out ADU STR in a beach town. I would do the same. They paid 200k and want 1.4m and they are stuck on their number. I'm hesitant to go that high because I will be renting my current primary which limits my capital. I just wanted to brainstorm ideas that might help us come to an agreement. Things I have thought of:
- Seller finance part of it at a lower rate. Can this be done in conjunction with a traditional loan? If so, is that loan disclosed to traditional lender or just between you and seller?
- Let them continue operating the ADU for some period of time..they like the income it generates. Maybe do an 80-20 split where they get most of income?
I've never done creative but I'm looking to revive a deal that is stalled on price. The seller lives in the house and rents out ADU STR in a beach town. I would do the same. They paid 200k and want 1.4m and they are stuck on their number. I'm hesitant to go that high because I will be renting my current primary which limits my capital. I just wanted to brainstorm ideas that might help us come to an agreement. Things I have thought of:
- Seller finance part of it at a lower rate. Can this be done in conjunction with a traditional loan? If so, is that loan disclosed to traditional lender or just between you and seller?
- Let them continue operating the ADU for some period of time..they like the income it generates. Maybe do an 80-20 split where they get most of income?
-other ideas welcome!
Thank you for any advice/ input!
Hi @Shelley Rubino, welcome to the BP Forum! How much equity/cash would you be putting in on this deal? Traditional lenders may accept seller financing, but it will have to be subordinated to their loan AND the combined LTV can't exceed a certain maximum number (probably between 70%-80%).