Seller financing - what's your experience?

[Tairsa Mathews]

My husband and I are looking at buying a 4-plex from a friend and would like to present the option of seller financing. I'm a little worried as this is a friend and I've always been warned about the problems of doing business with friends and family. I would love thoughts from people experienced in seller financing or anyone who has done business with friends or relatives. Thank you!

[Tyler Gibson]

@Tairsa Mathews I can't speak to the seller financing but I can speak to the working with Family/Friends portion. I have done 2 deals and both of them involve my father in some way. The first was a SFH home that I wanted to buy but didn't have enough Cash to get traditional financing. So I got a private money deal from my Father. The first thing he said to me when we started talking about it was "I'm not doing you a favor this is a business deal". It is a good deal for him because he makes interest on his money and the loan was secured by the property with a deed of trust. He and I both understood that If I don't pay him he will foreclose on the house.

The Second deal we are partners on and again we both went in understanding this is business. We put our agreement of how the business would operate and the terms of the deal in writing. 

Put it on paper so that you both have something to look back at and know that you both agreed to the terms. 

I have some family I would not be comfortable doing a deal with because I don't think they have the emotional temperament required to compartmentalize the Family/Business. 

I hope that my thoughts on the matter help you come to a decision about doing business with friends or family.