Assistance Needed ASAP: Crafting an Owner Financing Proposal

2 Replies

BiggerPockets, I need help drafting an Owner Financing Proposal...never done it before.

Details: I have the opportunity to purchase 3 Condos in a nice complex for $105,000 total from the same owner. They agreed to owner financing along with a credit check; they want to know my terms?

My questions to you:

1. Recommended down payment? Should it be a percentage?

2. What is the going interest rate (understand it is negotiable but is it usually above conventional rate or below?)

3. Average loan term for owner financing?

4. What else should I be thinking about?

Is this offer too off?

1. $10,500 down payment (10%)

2. 5% interest rate

3. 20 year amortization schedule with option to pay it off sooner

That NETs me $364/month in positive cash flow which I'm good with (ROI = 44%)

Thanks in advance for any assistance or deals that you've done. Was thinking, should I submit two offers; higher asking price with lower interest vs lower asking price with higher interest?

Thanks

Chris

@Christopher G.   Yes, those terms sound OK. I would be surprised they're agreeing to hold the note for 20 years.  I usually see 20 year amortization but with a 5 year balloon.  

Other item to think about: get it appraised to make sure you're not overpaying.   It also answers the other question, no I wouldn't pay more than appraisal.

Your profile says Germany but assuming you're in the U.S. or the properties are?

@Tom S. thanks for the heads up on the balloon, I included that in my proposal.  Yes, I live in Germany now but am trying to do long distance investing.  Closing on a house next week, somehow my realtor forget to tell me that the heat pump was missing...