Selling a Commercial Building and need advice

[Tyler Gardner]

I have a small commercial building in AZ that I want to sell. I have someone that is interested in doing a seller finance option. Which I am open to, I'm just not sure the best way to line up the deal. I owe  80k on the building and it's worth about 275k. Do I try and get a lump some of 80 to cover my debt and then finance the rest over a 10 year period? And then I'm not sure the best rate to charge for interest. 

Any advice would be welcomed! 

[Carini Rochester]

Since you'll have to pay off your mortgage, you'll need a big enough down payment to cover that. If you need cash in addition to that for any reason you have to ask for an even higher down payment. 80K is about 30% of the 275K. The buyer may be hoping for a smaller down payment. Commercial lenders are looking for 20% or 25%. So why would he want to have to come up with a larger down payment? There could be reasons and the 80K down may not be a problem for him. I would try to get about the same interest rate as the banks are getting. I would finance over 20 or 30 years, with a balloon payment at a timing that works for both of you. Talk it over. Often 5 years, 7 years, 10 years, to get you paid in full at a timing that you need it.