Seller Finance in Commercial Real Estate

3 Replies

Hello all. I’m working on making an offer for an apartment building where the seller is offering seller-financing. I am trying to think about how to structure the offer, as this is my first time dealing with this type of finance option and my first time working to acquire a commercial property. Any help with how to structure this offer/deal would be extremely helpful. 


You can find plenty of relevant discussions on the forums in regards to owner financing. But it might be wise to talk with some commercial lenders to figure out your exit strategies. 

Just because you can get a seller financed deal, which is awesome by the way, doesn't mean you can hold onto it. Eventually you'll have to refi out, so you'll want to make sure you set yourself up for that, assuming the plan is to hold onto it. Wouldn't hurt to get some lenders on your side before you even go into the deal.

As for terms, there are a million ways to slice the pie. I haven't done a commercial deal so I won't pretend to give advice I'm not qualified on. Best of luck with the deal, though! 

@Kesete Thompkins

Find out what the seller is going to do with the money he receives from the sale. If he is going to put in the bank, then you can offer him an enticing rate of return in comparison to .05%.  

Start out by asking what he wants, and then begin to negotiate.  We always try to get th going interest rate, which is around 4.5%. The amortization we ask for is 30 years. Try to get the longest term. If it is a refi, then 5 year term is okay. Ask for 10 years, and then go down reluctantly to 7.

The only way seller financing works is if the seller is motivated. On our last seller financing, the seller held the 20% down on an $11 million purchase. We had no money of our own in the deal. The only reason it worked was the seller was extremely motivated and he had limited options.

Good Luck, and you can do it!


Gino, thank you for the insight. This is my first offer like this as I mentioned earlier, so I want to get it right, and your insight has helped tremendously. I'm going to speak with the realtor Monday to get more information so that I can understand exactly what the seller is looking for. From what I understand, the seller is motivated, however I'm not sure if it's a dire situation with limited options. I'll let you know what I gleam from the realtor and run my numbers by you to see if it makes sense. 

Thanks again! I'm hoping that I can get this thing done so I can really venture in commercial units on a larger scale. 

Have a great weekend.


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