Seller financing on a BRRRR or house flip?

[Susan Tan]

Hi All! I have a seller with a fixer upper 2plex property on MLS that needs at least $100k rehab including full gut work and the seller is offering seller financing because he wants a high above-market price. How does one combine seller financing with a fixer upper? I usually offer all cash with HML financing and private money as the gap funder. I intend to flip or BRRRR this 2plex.

[Steven Goldman]

Quote from @Susan Tan:

Hi All! I have a seller with a fixer upper 2plex property on MLS that needs at least $100k rehab including full gut work and the seller is offering seller financing because he wants a high above-market price. How does one combine seller financing with a fixer upper? I usually offer all cash with HML financing and private money as the gap funder. I intend to flip or BRRRR this 2plex.

I do not recommend buying a full gut property at above market prices. I suggest you figure out the value of the property and negotiate an increased interest rate with the owner. Higher interest rate lower purchase price. You can refinance out of the rate but you can not get back the exorbitant purchase price differential. Make sure you have a good handle on your rehab. costs. A full gut rehab. for 50k per unit, sounds low to me. Just finishing a SFH 3BDR entire interior cosmetic rehab medium to high grade with some demolition including  new windows, kitchen, new appliances, 2 bathrooms final rehab costs 43k. If you are gutting it will be more. We did very little plumbing. That included new exterior electric cable and box and a little rewiring. We do a good deal of our own work. Add 20 percent for GC. if you are not doing the majority of the work yourself. As to financing, this sounds like a project to take on a capital partner for the rehab. Good luck and keep moving forward!