What does a Seller financing deal typically look like

[Lee Corbett]

Hi newbie here. I’m wanting to buy a 6 plex but banks are not willing to finance the deal. I was offered money from a private money lender who wanted 40% down, interest only at 9% and $9000 fee. 

I’ve often heard the term ‘Seller financing’ and was wondering what this might look like compared to a regular bank mortgage.

I assume the interest rate will be higher?

How long are they typically made for? 

Would it normally be 20% down or is this all open for discussion?

The seller is quite elderly so I’m not sure he wants to set up something like a long term loan but there’s no harm in trying right?

Any advice would be greatly appreciated.

Lee

[Larry Turowski]

@Lee Corbett Seller financing is whatever you agree to.  Typically, you would sketch out the terms (e.g., seller to hold $380K mortgage at 5% interest--maybe include amortization table--with 30yr amortization, balloon in 5 years) and give it to an attorney to write up.

Seller's generally only do seller financing when they can't sell the conventional way at the price they want.  So expect to pay more.  But it still might be worth it.  I've done a couple on flips where it is interest only and a balloon payment in 12 months.