Owner financing deal - what is important as the seller
For all the Owner Financing experts out there. I need your assistance doing a seller financing deal as the owner/seller.
I own a free and clear property and I had someone contact me and offered to purchase my property at retail price with me carry back a loan.
Her offer: Retail Price with 20% down (I asked for 30% down)
5-year-loan amortized over 30 year with balloon payment at the end of the fifth year. ( I asked for 3-year loan). She will get the deed, I will get a deed of trust with promissory note.
Interest rate 5-7%. What do you think is fair interest rate for this type of a transaction as the owner/lender. Should I ask for higher interest payment or points? I'm prepared to offer her lower interest rate if she willing to put bigger down payment.
The reason for me to consider such a transaction is the following:
- I invested about 47k into this deal and the buyer offer 66k which is at or slightly above retail price. So at the end of the 3-year I make a profit
- I get nice cash flow without dealing with tenants issues, don't worry about repairs or vacancy
- use the down payment money to invest in another property
- experience structuring such a creative deal
Do you have any tips for me as the owner? did I miss anything? would you do it if you were me?
Any advise would be much appreciated