Owner Financed deal suggestions needed

3 Replies

I posted about this in the Creative Financing section but didn't get many responses, so I'd like to ask here.  We are looking at purchasing two side by side duplexes, from the current owner.  She is a neighbor/friend, who is 75.  She's owned them for 25 years and they are her retirement asset. 

They were appraised at $260k each about a year ago.  She said she could be flexible on price though for the right people.  She likes us a lot and doesn't want to sell to corporate type investors.  I'm hoping she will take 240k each, so 480k total.  Maybe 500k.

They are all 2/1 units and which rent for around $900-1200/mo in our area, depending on size, condition, yard space, etc.  This is an area that has growing and consistent demand.

The current owner lives in one unit, and would like to stay in it till her death, and wants her occupancy as part of the deal.

How would you structure an owner-financed deal for this situation? I think we could do a down payment of 100-150k (upper end would be a stretch). I think she would take a partial cash offer, if we could pay off the rest in a short amount of time. Maybe refi in 5 years? Any suggestions on ways to sweeten the pot for her? I know she is getting chased by other investors, who may be offering all cash. So I'm trying to figure out ways to make this work for her.

Your biggest advantage is continuing to rent back to her which other investors may not offer consider offering less and giving her monthly rent of $100 or something for x number of years, that could set you apart especially if you are offering less

I am just now being put on to this owner financing thing.

Are you offering monthly payments as well or just the $100-150k cash down payment?

Also, are you expecting to start receiving the rents from the other three units (you mentioned that she owns 2 duplexes and live in one of them)?

@Aaron K. - thanks, that's a good idea for an incentive.  Offer her under-market rent for the rest of her lifetime....

@Demetrius L Spencer - we'd need to pay her monthly as well - not sure what that would look like, but perhaps we could do 20 yr amortization with a 5 year balloon....the main thing is she's aware of the limited remainder of her lifespan, (though she's doing okay right now), and she wants the money to spend as she wishes. So there would be no point to her of doing anything longer than 5 years I would imagine. That may even be a stretch, if she's getting all cash offers from other investors.