Real Estate Investor · Spencer, MA · Member since 2017 · 12 posts · 5 votes
I am currently looking at a four plex. I would like to purchase using Seller financing. The Property is paid off, from the numbers it will cash flow well. Never structured a deal using seller financing not sure how the numbers work. Where to go from here?
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
9y
@Edward Jette Work your numbers just like the seller was the bank. Treat it no different. The seller will charge you interest just like the bank. Have an attorney draft the note and mortgage. Make sure you use accurate vacancy rate, repairs, management fee , taxes and insurance etc..
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
9y
@Edward Jette Work your numbers just like the seller was the bank. Treat it no different. The seller will charge you interest just like the bank. Have an attorney draft the note and mortgage. Make sure you use accurate vacancy rate, repairs, management fee , taxes and insurance etc..
Rental Property Investor · Spartanburg, SC · Member since 2013 · 253 posts · 56 votes
9y
I'm assuming the seller has agreed to do owner financing under the terms/numbers where you said it will cash flow well. If those numbers include a DP and interest % and term, then you need to get with a local real estate attorney and draw up the paperwork. There are some contracts available here on BP as well, but being that this is your first with owner financing, I would want to make sure that thing is bulletproof. I'm sure there are others who can go into more specifics if you give out more details.
Real Estate Investor · Spencer, MA · Member since 2017 · 12 posts · 5 votes
9y
Seller is considering Financing the deal, but doesn't want to be in it long term 5 years or less. I did run the numbers like a traditional 30 year mortgage, but the short term is tripping me up.
Seller is considering Financing the deal, but doesn't want to be in it long term 5 years or less. I did run the numbers like a traditional 30 year mortgage, but the short term is tripping me up.
Sounds like you'll need to set up a balloon mortgage type of schedule if the owner will only finance up to 5 years. Find a good real estate attorney that is familiar with contract for deeds. Check out this link, it will tell you everything you need to know about balloon mortgages.
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Investor · Oak Lawn, IL · Member since 2015 · 20 posts · 4 votes
9y
I'm trying to do something similar to this on a fourplex I have. As the seller I'd like to carry back a portion of the overall transaction requiring the new investor to bring less cash to the deal.
Example: sales price: 300K
Owner finance second mortgage: 45K (15%)
Buyer down Payment: 30K (10%)
Bank Loan: 225K (75%)
Has anyone structured a deal where the seller held back a second position lien? It appears this can't be done via conventional loans as they are capped at 75% CLTV on investment four units. I'm looking for finance companies that may do this.
I'm not sure if a structure like this could help your situation. You buy on seller financing... sell the property to the next buyer and let them bank financing and carry the difference or sell the note...?