I recently got a call from a seller who saw one of my bandit signs. After listening to him I understood that this was originally a project his grandson was going to do. The seller funded this project for the grandson. Now the grandson doesn’t have time because he is going to school out of town. The seller says $22,000 is owed on the property and he would be open to owner financing at 5% no money down. After talking a little more he also said he would fund the rehab on the project. I haven’t got into specifics on payments etc. but this sounds like a win-win deal. I did tell him that I would Hey him some sort of early payoff penalty wants the rehab was finished so he would get a return on his investment he was still on board with this. Tell me, what are some things I should look for or ask about on this deal? Pretty new to the game and don’t want to go into something without knowing all the pros or cons. Thanks for the input I appreciate the help.
You are missing a lot of information for anyone in BP to give you advice.
What is the Purchase Price?
How much money is he putting up in rehab?
What's the timeframe for the rehab to be completed?
Besides 5% and no money down, what are the terms? interest-only? P&I amortized 15, 25, 30 years? balloon payment after how many years?
22k purchase price.
As far as rehab budget, he said to get a few quotes on the rehab, based on how I want it done.
Early stages haven’t discussed timeframe
I’m shooting P&I 15 yr. he knows note will be paid in full once rehab is done and property sells. So as an incentive for him, what should I offer since he won’t receive interest for the 15 years?
Sorry for the lack of info.
You said "The seller says $22,000 is owed on the property"
This purchase price is now $22k. This doesn't make sense.
So you haven't established the terms with him on the seller-finance.
Tim, you are about to dig a deep hole without handles to come back up.
- What is the price he is selling it to you for?
- Is this property free & clear from the seller?
- 15-year amortization doesn't mean the note is 15 years long.
- Why wouldn't the seller receive any interest if it's P&I (Principal & Interest) for 15 years?
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