All Forum Posts by: Eric Huebner
Eric Huebner has started 5 posts and replied 15 times.
Post: “Free” House with a catch. How can I make this work?
- Mukwonago, WI
- Posts 15
- Votes 2
Post: What terms would you negotiate for a seller financing package?
- Mukwonago, WI
- Posts 15
- Votes 2
Originally posted by @Gail Greenberg:
Hi @Eric Huebner Step 1: FIND OUT WHAT THE SELLER WANTS. Sometimes people care deeply about the interest rate; sometimes they want a certain amount of income to supplement their retirement - very possible since he's retirement age. Once you know that, I would approach it this way:
$425,000 Purchase price
-$42,500 You didn't mention a down payment but I'm assuming 10%
$382,500 Amount you're financing
Go here and play with the numbers to see how to get him what he wants. http://www.amortization-calc.com/
At 5.5% and a 30 year term, your monthly PI is $2,172
At 7%, your monthly PI is $2,545
Both are very manageable on gross rents of $625 x 8 = $5000
As far as a balloon, if he doesn't want a big taxable event NOW, he isn't going to want one in a few years either. Listen to people - find out what THEY want and build the deal around that. That's the key.
And further, I'll share something I learned last weekend at Pete Fortunato's seminar in Tampa. If this guy never wants a lump sum, you could refinance this property and take the money and go buy something else - in essence, put the mortgage you owe this gentleman onto another property. See what I mean?
@Gail Greenberg - THANK YOU for this breakdown!!!! You have brought up many good points that I didn't really think of in terms of the balloon payment/refi in the eyes of the seller.
Post: What terms would you negotiate for a seller financing package?
- Mukwonago, WI
- Posts 15
- Votes 2
Originally posted by @Josh Green:
I’m in agreement with Pete. Having a shorter term balloon with a higher than Bank rate avg with a longer amortization on payment is a solid deal. I would recommend a long enough term on the balloon for you to be able to get some improvements done so that when your note is de you can get some solid cash out refi terms and be sure to have your llc showing some decent earnings for the 2 years before you plan on qualifying for a loan.
Sounds like a great deal! Nice job man!
Thank you for your response! The amount of time to owner finance was one of my concerns. I want it to work out for both the buyer and seller, so that it is a win-win for both of us.
Post: What terms would you negotiate for a seller financing package?
- Mukwonago, WI
- Posts 15
- Votes 2
Originally posted by @Chad Nagel:
When I hold notes/ finance, I will not go below 10% on my interest rate. Risk has to equal reward. So anything sub 10% is a great deal in my eyes.
First, thank you for your response to my post. I agree, I need at least 10% down to have enough skin in the game, but how would this view of risk change, if at all, if the buyer had a perfect FICO score? My credit is perfect, and I have known the seller for many years, so hopefully the seller will be comfortable with the deal.
Post: What terms would you negotiate for a seller financing package?
- Mukwonago, WI
- Posts 15
- Votes 2
Post: What terms would you negotiate for a seller financing package?
- Mukwonago, WI
- Posts 15
- Votes 2
Hello BP!
I have an opportunity to purchase an 8 family apartment building in Wisconsin from a family friend. The owner owns the property free and clear and is looking to retire from the business.
The owner said he is willing to offer seller financing to help me purchase the property and help him defer taxes on the sale.
My question to the BP family out there is what are typical terms of a seller finance package?
The asking price for the property is $425k. Rents range from $650-$625 per month. It is well maintained in a B/C neighborhood. All of the units are currently rented. The units are in very good shape, but dated. I know this market very well, and the rents are at market rate.
I could give the seller a 10% downpayment. But this is where I get stuck. What are typical terms in a situation like this? I have always purchased properties with bank financing or paid in cash.
Thank you for your input in advance!
Post: CHOMPING at the bit in SE Wisconsin!!
- Mukwonago, WI
- Posts 15
- Votes 2
Post: CHOMPING at the bit in SE Wisconsin!!
- Mukwonago, WI
- Posts 15
- Votes 2
Post: Addendum for historical items in rental
- Mukwonago, WI
- Posts 15
- Votes 2
Post: Addendum for historical items in rental
- Mukwonago, WI
- Posts 15
- Votes 2