Personally I agree with your partner and would never overpay because of seller financing. It's a similar concept to owners who do 1031 exchanges and then over pay to avoid taxes. One ? WHY? FYI 20% down seller financing is no deal that can be done with any commercial lender all day every day. Happy hunting !
If you don’t like the deal then be more aggressive with negotiations. Also, don’t be afraid to tweak it. Ie. Counter offer $105k at 10% down and 4.5% interest. You have several levers at your disposal regarding the terms so don’t just focus on price, the other terms are just as important.
@Brynt Rushing Try negotiating more. I wouldn't overpay because of seller financing. And never count on appreciation when evaluating a deal.
The duplex we bought across the street for $63k. It had flooded and was gutted to the studs. We did a $40k remodel for $103k all in so it’s hard to use that as a comp. paying $110k is probably a little under market value when you compare the rents to other duplexes in the area. Regarding the deal in question, it’s in an area right by my house that I’m very familiar with. I’m mainly curious if you guys think the cash flow is too low (the 15 year financing jacked up my monthly). It puts me around $300-$350 per door after debt service. My property across the street brings in $450 per door including mortgage which I’m quite happy with. I’m certainly not counting on appreciation at all it’s just a bonus as usual.
also $110k 15 year term was what I negotiated him down to. I’m quite sure it’s his lowest. He wanted $120k on 10 year term.
Chris, wouldn’t you agree that 20% seller financing is superior to bank financing when you factor in 0 discount points/ origination fees paid and the fact that I don’t have to qualify for a loan?
@Brynt Rushing , how were you able to fund the one across the road? Seems to me that you should qualify for a "normal" 20-25% down loan, on similar or even better terms?
Try to find out his best cash price. If he still won't budge from $110k, he probably thinks he has you bluffed. Has he? Good luck...