Updated over 10 years ago on . Most recent reply
Seller Financed deal
Hello everyone, I have a deal in place now that I would like your opinions on. I have a contract on a vacant property (wholesale) I am now thinking about using the seller financing option instead of a flip. There is no mortgage or lien on this property, and the seller just wants to get rid of it before vandals target it. The property is in excellent condition but not in a high valued area. I'm thinking about 2k down and paying the seller 400 a month for 3yrs. The property will only rent for about 650, I was considering using the lease option agreement with the tenants that I find. What do you think? All opinions are appreciated!!!!
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You're paying $16,400 for the house?
Sounds like a winner if the seller would agree. Although, I'd hit them for another year or two on the terms. I talk to people that do 0% loans, but I've never done one. I'd offer something like 5% and say "Mr. Seller, do you need this money for anything in particular right now, or would you like to grow it some as I pay you?" I've done interest only loans that cash flowed like crazy, then cashed out on the L/O when it hit worked well on the couple I pulled off. Just depends on your sellers needs. Some will be up for that, some wont depending on their personal financial situation.
I wouldn't want to be paying $400/mo for something that rents for $650 long term, but that quick payoff sure looks good if you can weather the storms that may come up- vacancies, repairs, etc.
L/O is a good exit, you can probably get your $2k back and still cover your payment pretty handily. Just know that that $250 isn't profit, you need to build up reserves and $250 probably isn't enough to cover things over the long term. It'd take almost 2 years of that to pay for one HVAC replacement.