I'm new to the creative financing world of REI. My partner and I are talking with a seller about possibly seller financing a property to us. She claims that because the multifamily is owned by her business (an LLC), she can't owner finance it.
Is this true? I don't think it is... she also has a mortgage on the property, so our hope was to buy it subject to, take over her mortgage and then have her seller finance the remaining equity to us. Does anyone know if a house is owned by a seller's business, can it still be owner financed? Any other thoughts? We are totally new to this. Thanks in advance!
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
4y
Yes. Either the entity of hers or she personally could create a 2nd position note.
If you took over the existing financing, she would have to be comfortable with the seller financing portion being in 2nd position behind the existing mortgage.
The new note would essentially take the place of your downpayment (or a portion of it, depending on the amount).
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
4y
The llc ownership makes no difference. However, Any loan she has likely has a due on sale clause, even though rarely enforced, is a potential problem. If an owner is smart, they will Not sell sub2 the first and take a second, they would do a wrap mtg for the total amount financed.