Negotiating a seller financing deal with a seller I Need help!!

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I need help figuring out how to make this deal work. There is a tired landlord looking to sell his portfolio of three properties for 450k. The market value is 510k and they need no work at all. Two of the three units have tenants paying $1650 a month and the other unit is vacant. The owner has agreed to do a seller financing deal. He bought It In 2015 and owes 300k on the property. His monthly payment of principal, interest and taxes is $2890 with a condo fee of 750 for all three units. I’m not sure how much to put down. I’m thinking somewhere between 20k to 40k (I would prefer 20k) but it will be borrowed from another source so that will affect my cost. How do I go about this deal. Do I assume his mortgage and have him seller finance the rest? How do I do this without triggering the due on sale clause? I’m not even completely sure of how I process a transaction like this and what kind of paper work is involved. Please help!

Hi James, 

   I agree with Sedgrid, close with a real estate attorney and/or a title company to make sure all the paperwork is done correctly, and filed, to protect you and the seller.

For the terms, there is always some give and take between downpayment, sales price and interest rate so it will depend on your degrees of flexibility as well as the sellers.  

Commercial financing is sometimes assumable but if the loan(s) are 30yr fixed, residential type mortgage they would be subject to due-on-sale.

You could execute this as a wrap mortgage where the properties are sold to you, the seller continues to pay his underlying mortgage and you create a promissory note between you and the seller to document the financing between the Seller and You.   There is risk to triggering the due on sale clause but typically, as long as the bank continues to get paid, a bank will not go out of their way to disrupt a performing note.

If you have never done a wrap seller finance transaction before, you will absolutely need a good real estate lawyer or title company who is familiar with these transactions.   You will also need a good insurance company to help structure the insurance correctly.    A good source for these types of contacts can be the local real estate networking groups in your city.

Good luck!