How do I complete the deal.....

Question

I have a complicated question for all you creative wholesalers out there . So I have a 4 unit property under contract. I just received an offer from someone who wants to come in with half cash and owner finance the rest with a short term ( 3-5 yr ) deal. I'm not sure on  1) how to structure the lending part. the 3-5 yr part for the balance

2) what terms should I set for monthly payments

3) I'm in NY which is a judicial state do I have to use a lawyer

4) what are the risks for the property owner and myself

5) when and from who do I get my assignment fee

6) If they have that much cash why not just get a loan

Thank you in advance for the advice !!!

Tom S. · Answer

@Daniel Bork  I'm in Vermont next door to you, and yes, an attorney should draw up the paperwork for you.  I've done a few seller finance deals (on the buying side), and it shouldn't be too expensive, maybe $1,000 tops.

The terms are whatever you guys agree to.  Typically terms I've used are 5% interest, 30 year amortization, 5 year balloon.

There are lots of reasons why the person isn't getting a loan even though they have that much cash: could be maxed on the number of loans (10 usually). credit issues, contractor (1099) employment, etc  It can sometimes help if the buyer can provide a credit report to make the seller feel more comfortable.

Good luck and welcome to BP!

- Tom

Martha Nowlan · Answer

The wealthy developers I know will often ask for owner financing just because it's easier than tying up more cash.

Cash is king and just because you have it doesn't mean you want to have it tied up. You should absolutely use a lawyer. It would be silly not to! Good luck!

Daniel Bork · Answer

Thank you Tom S. and Martha Nowlan