Rental Property Investor · Winona, MN · Member since 2018 · 87 posts · 90 votes
I'm looking at a small 2bed/1bath SFR that needs interior rehab... the big things, like roof, furnace, windows are done. Seller is asking $85k — interior rehab would be roughly $10k.
If this property needed no interior rehab, it would be worth $85k. I do not think the seller has a mortgage, and he made a comment that he is looking to downsize his portfolio by selling one rental a year.
I’m thinking about asking him if he’d be willing to do seller-financing, but I wanted to reach out here to compile a list of advantages on his end to do so. Any ideas on how to structure this deal are appreciated!!
1. The rate you can offer is better than what he/she would get in an alternate investment. If they planned to just put the money in a CD or other low-interest bearing account (or they don't have any plan for the selling proceeds), you are providing a better option.
2. Please validate with an accountant, but it allows the seller to realize the gains as you pay them over several years. Instead of paying taxes on the capital gains on the sale, they pay as they receive the income.
3. Similar to a cash purchase, allows the seller to sell as-is and not have to worry about appraisal/inspections
4. Similar to #1, they like the idea of passive income. They enjoyed the checks they were getting from their rental, but no longer want to deal with the headaches. Owner-financing allows them to keep receiving this monthly check without having to to deal with tenants.