We've had three separate groups approach us in the past two weeks who did something very similar: seller financed small multifamily portfolios, all with plans to reposition or convert units. Unfortunately, all three are now stuck.

The common thread? They overpaid on seller financing terms, assumed higher rents than they could achieve, and didn't budget enough for repairs or capex. Now they cannot refinance out because the properties will not appraise, the DSCR does not work, and they are tight on cash.

Seller financing can be a creative way to get in, but it is often treated like a shortcut. In reality, it needs just as much underwriting discipline and exit planning as any other structure. Without a clear path to refinance or real liquidity for renovations, it is easy to get boxed in.

I would encourage you to run stress tests:

What if rents stay flat for 12 to 18 months?

What if refinance rates are still high when the balloon hits?

Do you have reserves or backup financing for the rehab?

There is plenty of upside in these deals, but only if the downside is planned for in advance.