Owner financing proposal

2 Replies

I recently found a deal which is ripe for an owner financed solution, and after talking to the sellers agent he told me to 'write up a proposal', which he can give to his client.

This will be my first owner financing proposal, as such it turns out I have no idea what to put in the proposal (a touch of sarcasm)!

 What I'm looking for is your responses to similar scenarios, and ideas on how I should structure the letter, maybe a copy of a similar proposal you have sent (numbers omitted) to give me (and others) a starting point.

@Austin Fogt - many of my best deals have been owner-financed, hopefully this one works out for you. I can't provide a form letter, but here's how I start these negotiations:

  • offer slightly less than what you consider an optimal solution in terms of price, duration, rate, and down payment. For instance- let's say ideally you'd want to put down 25% and would be very happy with 6% for 5 years with a balloon and a 25 year amortization. Offer 20% down, interest-only at 5.25% for 7 years with a balloon. This will allow the seller to counter right into your sweet spot.
  •  You'll have to sell yourself as well. In a sense, you'll be business partners with him for the duration of the loan. What would you want in a partner? I'd want someone easy to work with, who pays on time, and who has a track record demonstrating ability, along with a few references.

For that last point- I had a 10 unit deal that practically hit me in the face about 5 years ago. My PM and I were driving to one of my properties, and he said, "Oh, I know of this ten unit deal, but the price is kinda high, I doubt you'd be interested." I said, "Tell me more!!!"  

It turned out to be the best deal I've done by many metrics. I found out later that the seller knew a VP at the community bank which finances many of my deals. The VP worked directly with me on financing many deals. The seller said to the bank VP, "What do you know about this guy Mike?" 

The bank VP replied, "I've worked with him for years. He pays like clockwork." I'm certain that the reputation I developed by honest dealings and timely payments with the bank(my primary lender) led to the consummation of that 10 unit deal(which I subsequently refinanced with the same bank about 2 years ago.)

Good luck! MG