Have a commercial property I am ready to offer on asap here, will be seller financed for 20% and I have no experience in this so not sure how to set up the contract for the seller portion. Details are they will hold 20% but only for 5 years max. so with that short a term do I offer interest only payments to them and then just refi and payout the balance at the end of the 5 years? Or what would other options be? I need to figure this out asap so would appreciate prompt feedback. Would prefer an email or pm, email is in my profile.
I've done several deals like this recently. We just include a 'seller to hold a 20% 2nd note for x%' in the purchase agreement. My lawyer then does a 2nd position note and security deed when we close and provides us both with an amortization table and payment amount. I do it fully amortizing over 5 years but you could do interest only or amortized over a longer period with a balloon.
I've found that if I fully amortize it tends to eat up all of the cash flow/make the property slightly negative cash flow but I like doing that so I'll be in a good equity position in 5 years.
Not sure how different this would be in Canada though... Whoever closes your transactions can probably advise you.
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