I have some questions about structuring a seller financing offer.
1) Can you offer the seller a certain monthly payment that makes the property work with the rent it will command, or is it typically something you just plug into a mortgage calculator and the payment is based on the down payment, term, and the total loan amount?
2) I know a couple of benefits for the seller, like getting full asking price and having lower taxes on the money the get, but are there any other benefits?
3) does this typically work for properties that don’t need a bunch of work?
I know some people who live out of state and they have a vacant property that is mostly or completely paid off. They are wanting some monthly money coming in and were thinking about renting it, but they don’t want to manage it and want us to manage the property for them. I was thinking of putting together some scenarios that may work for a seller financing offer and see if they’d be interested. Any advice you can provide on how to make this an appealing deal would be greatly appreciated!
1. Yes, you can offer them anything you want. Just work the numbers backwards, to come up with the payment you desire.
2. This also allows them to NOT pay fees associated with selling a property, the conventional way. When you add in all the fees, it's quite expensive to actually sell a home.
3. Owner financing can work on homes that need repairs, presuming you have the funds to repair it. If this is the case, it's always better to use this, as the money paid to the seller should always be cheaper than borrowed money from institutions.
If they are not CASH motivated, this is a great option for them.
@John K. I think it could be a good option for them as they’ve owned the property for years and left it vacant. They only want to rent it now as they’re wanting to get a little money coming in each month.
The house definitely doesn’t need a ton of repairs, but it’s also not 100% retail ready and they live in another state, so selling it traditionally would be inconvenient at best.
That’s a great point about the cost of selling it traditionally. I’ll be sure to highlight that as well.