Best way to set up an owner financing deal?

[Steven C. Suarez]

Hi BPers! My friend has a condo in South Padre Island, Texas that I’m interested in. I currently own 3 houses in the Arlington, Hurst, mid-cities area of Texas, so getting a 4th loan may be tricky and very time consuming. Especially since it would be for a vacation rental. As you know, these appear more high-risk for banks. So we started bouncing around the idea of owner financing. He doesn’t know much about the owner financing process and neither do I. We both get the concept as he’ll be the bank and I’m financing the condo through him. But what are good terms in a deal like this? Do I put a % down and finance it for 5yrs, 10yrs or even 30yrs? I’m obviously looking to not put a huge percentage down, and get a great rate. Of course, i don’t want to screw him over in the process. He’s a very motivated seller so I believe I’ll be getting a great deal. Let’s put the sales price at 100k and maybe you can help me with some ideas about a great way to set up owner financing that will be beneficial to us both. Thanks! Stevo