Seller Financing, inidicates problem with property?

Question

Good morning,

I just got off the phone with my agent to discuss a property I found in my area. I just purchased a triplex and used FHA and now I'm left to be creative with the financing of my 2nd property i.e. I don't want to put 25% down. I asked him to find out if the property was owned free and clear because I wanted to offer the owner an opportunity to finance me without the bank.

My agent replied pretty quickly that seller financing was attractive back when interest rates were much higher but now since money is so cheap things are different. He sa8d beware of sellers interested in seller financing because it makes one wonder, "What are they hiding?" Can anyine shine some light on this thought? It seems like so many people, Brandon included, have used this strategy successfully. I don't know what I don't know and I am lookimg forward to your replies.

Thanks, as always!

John Thedford · Answer

Just because interest rates are at all time lows, there is still a benefit to sellers because they are going to charge well above 2 year or 10 year treasury rates. The banks are paying pretty much nothing, so getting 5,6,7% interest can be quite attractive to someone not needing fast cash. You ALWAYS have to conduct due diligence on any purchase regardless if it is OF, FHA, whatever the case. I would jump at OF in my market if the property met my qualifications.

Jay J. · Answer

Seller financing would still be an attractive option for the buyer if you position a deal that benefits both parties.

Although, your agent has a point, but just like any property, you've got to do the legwork to to make sure it's a good deal.