Question regarding a Duplex

4 Replies

Looking at a duplex in North L:as Vegas and wanted to understand what does the following mean? 

Completely remodeled and Tenant Occupied. Property being sold with total rents of $1950 per month on 1 year leases.

Owner will carry with 30% down and 2 year balloon at 6.5% amortized over 30 years.

Thank y

Essentially it means the seller is willing to sell and finance the property with 30% down of the purchase price and rest 70% will be amortized (split) over 30 year term at 6.5% Interest rate  so that it has smaller monthly payment but only for 2 years. After 2 years the remaining principle is due which means you have to come up with rest of the loan amount by either refinance the property or sell. Otherwise they will take the property back and you lose everything.

But you have to also understand the deal whether it makes sense with these terms. If you don’t have enough experience evaluating the deal then would strongly recommend not doing it.


It means the owner wants to be the bank. They will give you a 30-year mortgage but they require 30% down (banks only require 20 - 25%), they want 6.5% interest (banks are charging around 4%.

This would only make sense if they are selling the property well below market. I would take a hard pass.

The two previous posters have done a good job nailing what the Seller is willing to do.  I'll try to spell out some of the Pros and Cons.

PROS: If you are new to land lording and have no credit/poor credit and no track record that would be appealing to banks, but you do have money or have access to money through investing partners, the deal could make sense even if they require more money down and charge higher interest.  Also, Seller financing depends on the Seller: if you get in a cash flow pinch banks will usually give you a little time (15-30 days) before they initiate delinquency procedures.  Sellers may be even more flexible, realizing that they don't want to take the property back.  There's a caveat to this...see below.

CONS: You tie up more capital, you pay more interest, and you have a ticking clock (24 months) to improve everything that makes you have to do the deal this way (build credit, build a track record, etc).  Here's the caveat: if you're late paying, the Seller may be rigidly inflexible and begin filing foreclosure when you're one day late. So you could end up losing your 30% down payment very quickly.  Be sure your Seller carry note spells out clearly how long you have to cure a delinquency.