Seller will finance - Posted by Joe

Posted by Ben in Onio on March 05, 2000 at 11:45:51:

Interesting. What’s his motivation for selling? If he will live there who is responsible for repairs, etc?

Seller will finance - Posted by Joe

Posted by Joe on March 05, 2000 at 08:55:44:

I am looking at a up and down duplex in nice neighborhood for $84,900. Seller owns outright and wants to stay and sign lease. Rents bring $9400 a year, taxes $800 a year. The building is in excellent condition.
Seller will do a contract but wants all cash at 5 years. He would not answer if he needed any cash at close. The asking price is at the top end of the market but I feel he is flexible on the price. Any suggestions for a no money down deal? How would a contract or lease option be structured for a win/win situation?

Try this wrinkle - Posted by Michael Morrongiello

Posted by Michael Morrongiello on March 05, 2000 at 21:44:53:

Assuming he wants no cash down or very little cash down and is willing to finance you and you feel this is a money making property then see if you can negotiate a built in “roll over” provision into the finanacing. Negotiate a low starting interest ratre today and then also later on after the five years is up.

In other words when the balloon payment comes due in 5 years negotiate today that you can extend the term of the note to 30 year fix rate financing by paying him $20,000.00 non refundable cash at that time with either no increase in the current rate of interest or a slight .25% -.50% rate increase.

The net affect of this is that you have borrowed money long term at a VERY affordable rate with this private owner financing. If you run an internal rate of return calcuation you will see that the funds you have borrowed are really at favorable rates regardless of the $20K payment for the extension.

Michael Morrongiello