Real Estate Agent · Baton Rouge, LA · Member since 2019 · 84 posts · 33 votes
Hello,
Potential Deal - Owner Finance
Price - 180-200k
Duplex - both sides are a 2b/1ba
Would need about 20-25k in remodeling.
One renter on one side, the other side is the owners niece that is just paying the utilities (I do not believe the owner actually wants them there at this point.)
The owner has mentioned that he’s ready to move on from it, kinda just done messing with it.
He hasn’t put a price on it but I can’t imagine it being more that 180-200k
I want to offer a decent down payment to entice him in at about 15-20k, but as far as the interest rates, balloon payment, and amortization schedule I’m not so sure.
I wanna do this deal because it is literally right across the street from me in an appreciating area and I know for a fact that I could generate at least 2k a side using Airbnb.
What are some reasonable terms that I could offer without creating a huge mortgage payment to the guy.
Side note: he is only getting $650 from the rented side. I’m thinking a mortgage of 800 to him would be worth it
@Brian Mackey, rule #1 in negotiation: The one who wants it most, looses.
With that in mind, ask the seller 'what's the least you would take for the property?'. No matter his answer, ask 'is that the best you can do?'
Seller financing is great, however, you should go in with 3 offers in mind: all cash, low price; seller financing, little higher price; long term lease with option, the highest price of the three.
If they go for the seller financing, be bold--ask for long term w no balloon and no interest. Let them counter. Then the negotiation really starts.
It's nice that the property is close to you. But how much of a premium is that worth to you?
@Brian Mackey, rule #1 in negotiation: The one who wants it most, looses.
With that in mind, ask the seller 'what's the least you would take for the property?'. No matter his answer, ask 'is that the best you can do?'
Seller financing is great, however, you should go in with 3 offers in mind: all cash, low price; seller financing, little higher price; long term lease with option, the highest price of the three.
If they go for the seller financing, be bold--ask for long term w no balloon and no interest. Let them counter. Then the negotiation really starts.
It's nice that the property is close to you. But how much of a premium is that worth to you?
If it were me, before I started talking numbers and making offers, I'd have a longer conversation with the seller to see how motivated he really is. Then I'd ask him what he'd be willing to take if he were to sell it. This will give you a good starting point for negotiations.
If he is a MOTIVATED don't-wanter, he may be happy with 650/month (or less).
Also remember, you inherit tenants & their leases, so it may take awhile to start any reno.
@Brian Mackey In the interest of not completely wasting your time I would first see if the owner is even in a position to consider an owner financed offer both in terms of his financial position and his knowledge base of even knowing what owner financing means. These two factors often lead an owner to not even wanting to consider an owner financed deal.
After you get through that forcefield you can then work something out term and purchase price wise, but most people who are selling any real estate need the money from the sale either to pay off a loan and/or to move forward with their lives.
In chatting and building the relationship (I’ve been helping repair some things around the duplex), he’s the one that has been discussing moving on with the property and the thought of owner financing, he mentioned the tax benefits of it all.
Now he could just be testing the waters to see how much I know and what I would be willing to expose, but he’s definitely keen to the idea of it all...I guess overall I’m eager because I know the power of this property, and the willingness of information he’s been sharing with me.
I’m slow playing it, and building rapport, I just want to have my mind right when it comes to the negotiating.
I’m sending out positive vibes to the universe on this one lol.
Good info. I’ll come firm at the negotiation table without coming across as a jerk.
The tenant in their now is a friend who I can handle...fingers crossed...his niece on the other side is house shopping. I figure worst case scenario for the niece is a cash for keys type transaction.
The premium due to proximity is worth it in this particular deal. I currently House hack in the set up I have now literally across the street, and if I decide to rent out my current unit completely this new duplex could act as my second house hack scenario.
It’s a downtown property as well, in an appreciating market.
I really like the 3 offer scenario. I’m assuming with the all cash deal, I offer a very low price so that the other deals look that much more enticing.
@Michael Noto I'm 21 and about a year away from buying my first property to house hack, but I've had some friends send me multiple properties that only want to sell as owner financed. You mentioned that there's some kind of hassle with owner financing, so what does that normally entail, and why would a seller want to do this is if there is extra effort that goes into it?
I tried looking through Blog posts on this site but couldn't find much so any information is greatly appreciated.