I have found a nice duplex which generates $1400/mo rent, tenants pay all utilities and the only expenses would be grounds maintenace, taxes and insurance. The property is practically new in an excellent location with no vacancy rate to speak of. The owner is willing to finance but didn't give me any terms. I don't want to offend with a crazy offer but would like to give a realistic term yet not ever done this type of deal. Is 10 yrs too much to ask for say at 6% interest? Is 5 years more the norm at 10%? Someone with more experience here throw me a bone please.
Depends on how much seller is motivated. I recently purchased a condo with 20% down and seller holds a 30 month Land Contract @5% interest amortized 30 yrs. Negotiation, as always, is key to your success.
Just a quick note...I did this LC on a property with NO outstanding mortgage. Beware of the "due on sale" clauses on most mortgages. I would never do that kind of financing if seller still owes on their loan.
"The property is practically new in an excellent location with no vacancy rate to speak of."
Even so, it would not be advisable to do your numbers without building in at least an 8% vacancy factor, 10% property management expense, as well as 10% for repairs/capex. You want to account for every possible contingency before purchase - helps you sleep easier at night.
Terms are absolutely negotiable. How much down are you considering, and what is the owner's asking price?
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