First Owner Financing Proposal - Vacation Rental in Charleston

7 Replies

Bp Community,

I am looking for advice on acquiring a multi-family vacation rental property in Charleston SC. The property has two 3 bedroom houses on the lot, in which I would Airbnb one and live in the other. The owner or the property is open to seller financing and asking for a proposal. The value of the property is around $850K.

Should I base my proposal on a 30-year mortgage? How long should the terms be before I refinance? Any advice would be great!!!

You'll probably get more responses in one of the forums more geared towards financing, to be honest - this is more about the financing and less about the short-term rental aspect.  

One thing I do know, is that the owner will want a higher percentage rate than the rock-bottom rates that conventional lenders are offering.  If you can, find out what the owner's goals are, and see if you can make an arrangement that works for both of you.  

Originally posted by @Colton Fairchild :

@John Underwood I like this strategy. Would you try for a 10 yr. balloon on the 30 yr. amortization? Or what timeline would you suggest for the balloon payment?

 10 years or as long as owner will finance. The lower the interest rate the longer you should try and get the owner financing for.

@Jabari Seabrook

I just closed on an AirBnb property (Duplex) with seller financing. My terms were 20% down, 5% APR, 5 yr. balloon, 30 yr fixed. Property is brand new. Purchase Price is $320k, and it's worth $500k.

Here's some recommendations,

- Provide three offers with range of downpayment, interest rate (2%-5%), and terms.  Yes, you can do 2% if you raise the purchase price.  It can be win-win for both of you if you run the numbers.

-Make sure it's non-recourse.  

-Make sure that y'all have a good attorney that you both trust. 

-There was a good BP podcast a couple of weeks ago by a Seattle Investor that may be helpful for you. 


I would say ask the seller what they would want and base your proposals off that. I like to give people 2-3 options so they pick from them and we hopefully avoid negotiation.

Since your question seems to be about what options you would have there are more than a few ways to do it so get creative based on your need and the sellers need. Common ones are:

- 30 year fixed like a bank

- 5 year seller financing, amortized over 30 years, with a ballon payment in year 6 (change years based on situation)

- you can do 100% seller financing or get 80% from the bank just do seller financing on the 20% down payment. 

- you can do interest only payments with a balloon payment for the life of the loan or first year only. 

Typically the best ones are where they give you 30 year fixed rate financing at or below prime interest rates, but most sellers don’t want to wait 30 years to get paid hence the balloon payment option. Goodluck and remember the best seller financing deal is the one you can get so be flexible when it’s offered. 

To add to these great answers, I listened to a podcast where in year three or so, the buyer would ask the seller who is holding the note if they want the balloon payment earlier than the originally agreed upon term of five years (or whatever the term was) and then discount it. 

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