First Deal...8 Units...Owner Financing?
Hi all,
My husband (Nathan), and I (Erin), are 26 years old and have been aggressively looking/making offers to find our first deal. Over the past 2 years we have read books, listened to podcasts, and met with seasoned real estate investors to increased our knowledge in this pursuit. Our realtor recently showed us an 8 unit town-home style building. The owner is 75 years old and would be interested in owner financing. Our realtor mentioned structuring the deal where the seller would sell us one of the town-homes separately and we would use an FHA loan from our bank plus an additional 20k or so to cover the 20-25% down payment on the 8 units. The realtor said that the seller would potentially like a 3-5 year balloon payment (due to the age of the sellers) and at that point, I guess we would go to the bank to get a conventional loan?
How is owner financing typically structured? What are typical interest rates with owner financing? What should we be aware of/ask questions about with this type of deal structure? How would we go about getting a loan from the bank for the when the balloon payment occurs?
Also, this unit is in the 100 year flood zone which makes us a little weary. We were told we would have to have flood insurance. Should we be concerned about having our first deal/8 unit in a 100 year flood zone?
Thank you,
Erin and Nathan