I'm selling a commercial property in NH. What's a reasonable interest rate? They've suggested 6%. Seems SUPER low. I would think that 9% is reasonable. Your thoughts? Purchase Price: • Total: $1,985,000. • Deposit: $10,000 (First Deposit) within 3 days, additional $30,000 (Second Deposit) within 30 days. • Seller Financing: $297,750 (15%), 5-year term, 20-year amortization, 6% interest. • Balance: $1,647,250 to be paid at closing.

Are you financing in 1st or 2nd position?

@Parker Fairfield Also be careful with financing in Vermont - it’s got some crazy laws even when seller financing Definitely talk to an attorney prior to striking the deal.

Also important. Where’s the other 85% coming from? If they’re paying 85% cash, like from a 1031 exchange you have almost zero risk and 6% is fine. If they are borrowing 75-85% (putting down 0-10% of their money,) it’s virtually unsecured debt as you would never collect a dime during a foreclosure. I’d charge 10-12% AND be ok with never collecting because I’m selling for top dollar. In fact I’d prefer the selling price was increased $100k and zero interest for 5 years.

@Parker Fairfield Are you selling a note, Buying a note or creating a note? It sounds like you are creating a note but as @Erik Estrada mentions what position are you in? What is appropriate is whatever you can negotiate. This in part will depend on how good the deal is and what they other parteies other options are. A fantastic deal and the only way the buyer can do it is through yiour note, you can charge a very high rate. A lousy deal and you may have to offer a very low rate just to entice a buyer to bite at all.

Updated over 1 year ago on 07/18/2024. Most recent reply

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Parker FairfieldPoster

Rental Property Investor
North Conway, NH

Private Lending & Conventional Mortgage Advice

What interest rate for 10% Note

Parker FairfieldPoster

Rental Property Investor
North Conway, NH

Posted July 18, 2024 10:38

I'm selling a commercial property in NH.
What's a reasonable interest rate? They've suggested 6%. Seems SUPER low. I would think that 9% is reasonable.

Your thoughts?

Purchase Price:

Total: $1,985,000.
Deposit: $10,000 (First Deposit) within 3 days, additional $30,000 (Second Deposit) within 30 days.
Seller Financing: $297,750 (15%), 5-year term, 20-year amortization, 6% interest.
Balance: $1,647,250 to be paid at closing.

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What interest rate for 10% Note

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