What seller financing examples have you accomplished?

Question

I am looking into doing a first deal utilizing seller financing. What are some of the examples/terms that you have had in some of your deals? Any tips or ways you would have improved the deal? Thank you!

Michael Henry · Answer

@Trevor Scheiderer

My first property purchased in 2015 selling price was $155k. Appraisal came in at $131k

Instead of dropping the deal owner agreed to owner finance $25k ... 30yrs amortization With a 5yr ballon.

Payments approx $150/mo

I put down 5% on a conventional loan for the remainder. Only $6,500

Fast forward to 2019 property is worth $200k , rents for $1775/mo. I can refinance to pay owner or sell in 2020. I’ll be selling the property to invest in other deals.

Curtis J De Leon · Answer

@Trevor Scheiderer

I have a SFH rent to own deal right now, the seller was a big investor and felt that she had made her money so was selling off her portfolio.  I looked at the last home she owned and asked if she would seller finance since I didn't have 20%. She agreed and I pur6the home for $59k with 12.5% down and $500/mo payments for mortgage and interest.  I have a balloon payment due next September and have already found a bank that will count all money paid thus far as the down payment and get a 15 year mortgage on the property when I am ready.  I'm only holding off because I currently have a 4% interest rate and I know that no bank can beat that.

Trevor Scheiderer · Answer

@Allan Smith I like that logic. Thank you so much for that input. I have been hunting for it to try to lower the down payment, but the interest cost may eat up the majority of that idea.

Michael Henry · Answer

This was a townhouse / condo in south Florida. It was significantly under valued At the time.

Allan Smith · Answer

I came across a tired landlord and he was wanting a high-ish price so I offered 5% interest only payments with balloon in 15 years.

Opinions may differ on this, but I think you don't hunt for seller financing. Just offer cash and seller financing to every seller worth making an offer to and eventually one will pick OF instead of cash.

Trevor Scheiderer · Answer

@Curtis J De Leon Fantastic! Sounds like a positive deal. Thank you for sharing!

Curtis J De Leon · Answer

@Trevor Scheiderer

I talked to over a dozen banks and credit union and each one was confused by my scenario, I finally talked to a broker at Guild Mortgage and she said she could make it work IF i had all the payment recorded electronically to prove my story. It took me about 6 months of searching.

Trevor Scheiderer · Answer

@Curtis J De Leon That is so great, Curtis! I have heard that balloon payments are popular in this scenario. How long did it take for you to find a bank that will take your equity as a down payment for the refinance? Is that a common practice?

Trevor Scheiderer · Answer

@Michael Henry That sounds like a true success story. I am definitely surprised the owner did not agree to lower the price to the appraisal. Was that a multifamily and in what market?

What seller financing examples have you accomplished?

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