Advice on asking for Seller Finance

6 Replies

MIL's neighbor called and said they are going to sell their house. Renter is moving out end of September. MIL said before she goes to market she knows someone that could be possibly interested in the property. An assumption at this point, but the house should be paid off. They were getting $950/mo and just raised to $1100/mo. House will need a little work, but should value around $175-$180k with updates. I am not afraid to ask about them doing seller financing, just need assistance on how that looks. 

For example purposes:

Offer $150,000, how much would you offer as a down payment? 

How long would you ask for seller financing? If I could fix and BRRRR, would be ideal.

What to offer in a finance rate? 

What else am I missing? 

The beauty in seller financing is you can make up whatever terms work for you and the seller.  I've asked for seller financing may times before, typically I offer 5-10% down, 4-5% interest/yr, 2-5 year balloon payment, 20 year amortization.  But again, it's whatever works for you.  One thing I will say just looking at your numbers, are you sure that's a good deal?   $1,100 rent on $150K purchase that needs rehab doesn't sound like a deal to me, but could just be differences in our markets!  

First, I'm going to guess that MIL is mother in law?  I'd have her set up a meeting with the seller.  Have coffee at the kitchen table, and explain the benefits for them selling to you directly.  Let them know you are an investor, and the way you prefer to buy is with the seller being the bank.

I wouldn't even mention interest at first.  They may look for straight pay off--stranger things have happened.  Go for the stars and maybe hit the moon.

Also, don't run the condition down, but let them know you'll have about $XXX in repair costs.  You can also mention their possible tax benefits in selling to you with them holding the note.

One last comment--let them know if you go to contract, the property will close on time--the best time for them.  

Oops--one more 'last' point--if there is a small mortgage left, let that be you down payment.  Otherwise, don't mention down payment--if they hold the note, you'll be improving the property with your rehab.

Hope you get the drift.  Good luck.

Originally posted by @Landon Bleau :

The beauty in seller financing is you can make up whatever terms work for you and the seller.  I've asked for seller financing may times before, typically I offer 5-10% down, 4-5% interest/yr, 2-5 year balloon payment, 20 year amortization.  But again, it's whatever works for you.  One thing I will say just looking at your numbers, are you sure that's a good deal?   $1,100 rent on $150K purchase that needs rehab doesn't sound like a deal to me, but could just be differences in our markets!  

Landon, thanks for the reply. Yes, $1,100 is low for the market. It would garner a $1400-$1500 minimum. 

Originally posted by @Marc Winter :

First, I'm going to guess that MIL is mother in law?  I'd have her set up a meeting with the seller.  Have coffee at the kitchen table, and explain the benefits for them selling to you directly.  Let them know you are an investor, and the way you prefer to buy is with the seller being the bank.

I wouldn't even mention interest at first.  They may look for straight pay off--stranger things have happened.  Go for the stars and maybe hit the moon.

Also, don't run the condition down, but let them know you'll have about $XXX in repair costs.  You can also mention their possible tax benefits in selling to you with them holding the note.

One last comment--let them know if you go to contract, the property will close on time--the best time for them.  

Oops--one more 'last' point--if there is a small mortgage left, let that be you down payment.  Otherwise, don't mention down payment--if they hold the note, you'll be improving the property with your rehab.

Hope you get the drift.  Good luck.

Marc, yes, Mother-in-Law! Great advice, thank you! 

@T.J. Isaacs

I know an investor that would tell the sellers something of the effect of : "You set the price, and I'll set the terms."