Down payment with Seller financing

2 Replies

Hello everyone, 

I have my eye on a duplex and I'm about $10K short for the 25% down typically required for a 2-4 unit property.  I've contacted the seller, and they are open to offering seller financing on a portion of the house.  Question is, how much do I take advantage of it? My initial thought was to only ask for the $10K but then if I did $20K, that would leave me with some cash reserves for the just in case scenarios...or eventually a shorter leash on another property. 
Has anyone structured deals like this and will the bank have any problems with this assuming they know where the money is coming from?Thanks!

Not sure how you will be able to pull this off. The bank will want to see the down payment physically come from you from reserves not a loan. Can you talk the seller into taking a smaller down and seller finance the rest at a reasonable interest rate that you can both agree on? I recently purchased a duplex using sellers financing and in my case I negotiated 10% down and the seller held the note for the rest at 4.5% amortized over 30 years. The benefit to me was less money down and no PMI with a damn good interest rate for an investment property. The benefit to the seller was monthly cash for the life of the loan, more money in the form of interest and less capital gains since the gain would be broken up over time. See if the seller would be open to something similar.

@Jeffrey A Hayes i agree with what Keith said. i have done a few seller financed deals. see if you can get them to hold the whole thing for 2 years or so, come in with smaller down payment and then get yourself situated for permanent financing before the end of the term with the sellers.

if not, then you need to start talking to small local banks and see what they are willing to do in your situation with the down payment. most want to see it come out of your seasoned bank account, but it’s possible that a smaller lender will be willing to get creative with you.