Fishy Seller Finaincing

[Evan Manship]

I am in the middle of acquiring a property for $25k here in Indianapolis. I originally offered $5k down, $500/month, and 5.55% interest (alliteration not intended). The seller's broker countered with $10k down with paying off the rest of the balance ($15k)  at the end of 1 year. The property is currently under a 2 year lease with 1 year still remaining. (rented at $600/mo)

-I have not seen the inside of the property, but have been told it has many updates and is turnkey

I will pay zero interest

-I will make no monthly payment

-I will collect all the rent

The lack of an interest payment is a red flag to me. Should it? I am ready to make this happen but want to cover all of bases. Let's hear from you devils' advocates.

[Steve Vaughan]

Interesting.  If there is no interest charged, the IRS will assume implied interest on the seller's side.  They are better off charging some, but that is their problem I guess.  As long as it's not a land contract/contract for deed where you don't get title, you are positive you can come up with the $15k balloon at EOY1 and you have viewed the executed fulfillment deed to your satisfaction at closing, I'd say go for it! I would never do some land contract where I have to wait for and hope for proper conveyance after I give them my $15k.