Seller Financing Terms I want to offer for a Lakefront Motel
I am in the process of purchasing a motel, and i have a lot stacked against me in terms of coming up with 20-25% (I only have 15% liquid as of today) , rising interest rates, and cash reserves that may be needed in a commercial mortgage. I am trying to liquidate some properties, but this will be the slowest selling season. I want to approach the seller with terms for a short-term bridge interest only loan while i continue to raise capital, stabilize the motel (it is extremely underperforming) and hopeful for lower interest rates. Would I be able to get feedback on the terms i would like to offer? I want to make sure they are not offensive. Any feedback will be greatly appreciated.
Purchase Price | $ 549,000.00 | |
Deposit (year 1) due 1/1/2023 | $ 55,000.00 | |
Deposit (year 2) due 1/1/2024 | $ 55,000.00 | |
Loan Term/Amort - 24 months/ 180 months - interest paid* | $ 37,044.00 | |
*50% towards purchase price | ||
Total cash to seller by 1/1/2025 | $ 586,044.00 | |
Terms 24 month / 180 amortization @ 7.5% interest with 10% down. |
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Full access and occupancy of property | ||
full charge of day-to-day operations including all revenue generated | ||
fully responsible for all expenses and maintenance of property | ||
Allowed two inspections a year to ensure proper maintenance and operation of property | ||
All improvements will be funded by buyer and 100% of net profit | ||
Buyer to obtain permanent financing within 24 months | ||
Deposits and 50% of interest as down payment | ||
If permanent financing not obtained by buyer, all deposits, interest and improvements are non-refundable |
@Natali Gelbke-Mattis
First thing I would do is ask the seller if they would be open to some creative short term financing? If they say no then you don’t need to waste your tim racking your brain over it
Quote from @Chris Seveney:
@Natali Gelbke-Mattis
First thing I would do is ask the seller if they would be open to some creative short term financing? If they say no then you don’t need to waste your tim racking your brain over it
Part of my intention is to sell them on the idea, and put on paper his ROI. The sellers are an older couple ready to retire from the Motel, so building the relationship is important in this transaction. I've never structured seller financing so i didn't want to come off as offensive.
I'll just go for it - at worst, he says no.