First Seller Finance Deal Advice

Haverhill, MA · Member since 2016 · 27 posts · 2 votes

Hi BPer,

Please help, is this worth it as either a flip or rent/hold

I've meet a owner(free and clear) of a single family who suggest to me he'll do owner finance even though i told him i can qualify for conventional loan and have the 20% down payment. He sent me an excel sheet of property below. Property is in Lowell, MA 01854 close to Lowell General Hospital.

Purchase price of $250k, $50k down, 4.5% ( ARV ~ $325k, dont know cost to fix yet)

Bank Mortgage payment - amortized 30 Years (principle and interest)	$1,013

Water $ Sewage ( Annual $800)	$67

R/E Tax (Annual $4264)	$355

Insurance (Annual $1400)	$117
Estimated total monthly cash outlay	$1,552


Rent	$1,775
Net cash inflow	$223


Balloon Payment due 2028	$ 155,123

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Jeff Dulla

Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes

@Zico George Are you receiving any benefit from his structure? Lower down payment than 20%? Lower rate then what you are finding elsewhere?

Why would you ever complicate the structure if you can afford to do this a traditional route unless you are receiving some benefit or help on a loan that you otherwise couldn't afford?

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LaDonna Aubrey
Investor · Fort Worth, TX · Member since 2016 · 2 posts · 0 votes
9y
No . This sounds like a shady deal . Any seller should want cash on a deal instead do owner finance . Seller sounds like he is Invester too .
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Zico George
OP
Haverhill, MA · Member since 2016 · 27 posts · 2 votes
9y
please held from to contributors
@jay hinrichs
@russel brazil
@diane g
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Zico George
OP
Haverhill, MA · Member since 2016 · 27 posts · 2 votes
9y
@LaDonna Aubrey he mention he's tired of been a landlord for 30 years, he's retired and old...they've sold other properties they had.
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Jeff Dulla
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
9y
@Zico George Are you receiving any benefit from his structure? Lower down payment than 20%? Lower rate then what you are finding elsewhere?
Why would you ever complicate the structure if you can afford to do this a traditional route unless you are receiving some benefit or help on a loan that you otherwise couldn't afford?
1 Reply
Zico George
OP
Haverhill, MA · Member since 2016 · 27 posts · 2 votes
9y
@Jeff Dulla thanks for input.
I can get approved with conventional for 25% down and interest rate of 5.0% , versus seller finance of 20% down and interest at 4.5%
I'm thinking the reason the seller doesn't want to list it on MLS is because he stills want to have his hand on pie without being a landlord and still collect monthly checks. Maybe there worried about capital gains and depreciation recapture.
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Account Closed
Rental Property Investor · Savannah, GA · Member since 2014 · 298 posts · 67 votes
9y
I would go with the seller financing over a bank loan any day! Why? He's giving you better terms. There will be lower closing costs. It will be a quick and easy closing.
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Zico George
OP
Haverhill, MA · Member since 2016 · 27 posts · 2 votes
9y
@Account Closed yes seller offer better terms.
Only problem is the deal doesn't look good for either rental or flip(??). Sellers cash flow calc doesn't include deductions for Capex, vacancy, or maintenance.
Any ideas on how to make the deal work for me without offending the older couples, what would you do.
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Alejandro Calixto
Rental Property Investor · Brookfield, IL · Member since 2017 · 88 posts · 17 votes
7y
@Zico George did you end up moving forward with the deal? If so, what terms did you agree to and how is it working out for you?
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