Looking for Advice on a Seller Finance Deal That’s Getting Tight

[Raza Dhanji]

I’m looking for some input on a seller finance deal I did couple of years ago (prior to joining Subto). Things were fine at first but I’m now in a bit of a bind and trying to think a few moves ahead.

Here’s the situation:

- Purchase price: $282K

- Seller financed $280K at 4.5%

- I’ve been making interst only payments on time

- The property is cash flowing

- Property is worth around $270K now

- Balloon is coming due soon

The seller was hesitant to extend but has agreed a 12-month extension with following stipulation:

- $2,800 extension fee (1%)

- $10K principal paydown

- New interest rate of 5%

- No further extensions — balloon would be due June 2026

The deal is cash flowing but I’m concerned I’ll be upside down when it’s time to refi and might need to bring a large chunk of cash to the table.

Would love to hear from anyone who’s dealt with something like this:

- How would you approach it?

- Any creative ways to refinance or exit?

- Tips to improve appraisal value before the balloon hits?

Appreciate any insights 🙏🏼

[Micah White]

Is there any way to force appreciation here? Whether its through renovation or adding bedrooms/bathrooms etc? If so, you could finance the renovations through a personal loan, private money loan, or a SBA loan if you have a LLC in place. It seems like the market isn't appreciating as quickly as you first imagined.

This is a tough spot, Raza, and I think if all goes wrong you should be prepared to sell and eat the loss and take this as an expensive learning experience. Best of luck! Happy to help in any way I can, so please don't hesitate to reach out.