how to make owner financing irresistible

Question

Whats up BP, So i am submitting an offer on a 6 unit multi.  Offer one is conventional 20% down on a 5yr arm with balloon end yr 5, amortized over 20yrs.  Offer two is owner financing, if the owner will go for it. Which brings me to my question.

What are the main points of interest to make your owner financing very attractive to both the owner and myself?

My thoughts are lower down payment, longer term...say 30 yr fixed, which equals less out of pocket up front and lower monthly payments. For the seller they still get monthly income without the landlord issues.

BP thoughts are always greatly appreciated.

Brooks Everline · Answer

Thank you Jeff and Brian for your very helpful advice on the topic. I will be sure to post the outcome.

Happy investing

Brian Gibbons · Answer

In residential or commercial it's got to do with cash or terms

If it's all-cash I never pay more than 80% of appraised value, because generally cost 10% to sell and I only have 10% equity

If it's charms I'll even consider being more than appraised value for the payment will be well under rent to the seller so that I can maximize my cash flow

It's almost like a mass release concert where the payment to going to the seller is a lot less then  pleated rent

In fact many sellers will take a note with no payments or interest only payments to be able to get full value

Jeff Trevarthen · Answer

A smart seller would appreciate a higher rate of return in exchange for the seller financing.  And if you amortize the loan over 30 years, make a balloon payment or something to show that you have an exit strategy.