Tell me your previous seller financing deals

[Ryan Cleary]

Currently in negotiations on a seller financing deal and would love to compare it to other similar deals.

What was your:

-Down Payment

-Traditional or balloon

-Term

-etc

[Derek Dombeck]

I did several recently, but one of them had some interesting scenarios.  

3 bed 1 bath rental house that the seller owned for 6 years and he paid 55K for it. He was 70ish years old and didn't want the management anymore but he liked the monthly cashflow and wasn't seeking chunks of money. He also admitted that he never raised rents and that it certainly could bring more. ARV is 115K and it needed paint, flooring, and windows. I offered 34K cash, or 55K with zero down and payments based on 5% interest with a 5 year balloon, or 70K with zero down and 0% interest payments of $325 per month with a 5 year balloon.

Note, his cashflow as a landlord was $275 per month, he didn't want to stick more time and money into the house and he told me he didn't want to pay a large tax bill. 

So, he chose the 70K offer because it keeps the most money in his pocket overall. That's actually the cheapest out of pocket offer for me that I made, plus it gives me a higher basis in the property as well.

Next, I called a financial friend and she gave me 10K from her IRA for an Option to have 20% of the equity and cashflow from this property. That's the money I used to rehab it. Note, this is not a loan. It is a great way to get people's small retirement accounts working.

After rehab, I put a tenant/ buyer in the house on a rent to own. They pay $995 per month, gave 5K down and have 2 years to purchase at 115K. They receive zero rent credit towards the purchase, so its in their best interest to purchase asap.

The rent I'm collecting is $345 more than the previous owner was. But he is still making more monthly income than he was before without the management hassle.