Seller Financing - Need Help!
So here's the deal. House is listed FSBO @ $154,900. Built in 2001. It has 4 beds, 3.5 baths and 2,662 sq ft with a 2 car garage. Nothing fancy, typical house for the neighborhood with hardwoods, fireplace, etc. No upgrades. House doesn't need any maintenance, although the rough will probably need to be replaced in 10 years, everything is in good working order. He's including a 1 year home warranty and termite bond.
The seller listed it for $154,900 with $5,000 as the down payment with monthly payments around $1,350. I asked him about the terms and what was more important (rate, down payment, etc) and he said he's open to negotiate and they are all equally important.
Here's the rest of the numbers (per month)
Taxes - $207
Insurance - $50 estimated
HOA - $30
Property Management Fees - 8%
Vacancy / Maintenance Reserves - 12%
My goal is to get this property for $0 down, but am willing to do the $5k down if I can make the deal work.
The house should rent anywhere from $1,400 - $1,600. I'm using $1,500 in my calculations.
Possible Scenarios
Option 1: Full asking price w/ 0% down, 4% amortized over 40 years, with a balloon payment at 5 years. ($265 monthly cash flow, $166 @ 5%).
Option 2: $150k, $5k down, 4% amortized over 30 years with a balloon payment at 5 years. ($220 monthly cash flow, $134 @ 5%).
I have no idea if I'd be able to get 40 year amortized or 4%, but I figured if it doesn't make me blush it isn't low enough right?! I figured it's at least a starting point and see where we go from here. The one good thing is that this house should appreciate as our market is heating up and down the road with a few upgrades/updates I should have some considerable equity.
What does everyone think and what would you do? The cash flow for this price point isn't that great, but for minimal invested capital (or hopefully none at all), it's a pretty great return!