New investor... First property

[Zapata Tate]

Hello BP family. I'm working on my first deal, but I'm stuck. The owner is 78 years of age and is ready to get out (He has several properties). I'd like to try seller financing, but I'm not sure how to approach it. The property in question is occupied and has had the same tenants for years, but it needs some serious repairs. If I paid the seller's price and did nothing to the property, it would cash flow between $300 and $400. That's a minimum 20% ROI. I've heard of people walking away from the negotiation table with cash from seller financing deals... HOW? I've also looked at hard money. Should I have a realtor involved?

[Joe Villeneuve]

This could be what most REI look for as the Holy Grail of opportunities...a retiring REI selling multiple properties. He will have a whale of a tax situation if he sells them all at once...even over a short period of time. He probably is used to, and loves, the cash flow he's been getting...but doesn't want to be a landlord anymore. I'm guessing he has 100% equity on all, if not most of these properties.

Here's your play:
1 - Make your offer a little less than the AP.  This is to improve your CF
2 - Make the offer based on 10% down,  This improves your cost to buy.  Your cost is ONLY what comes out of your pocket...not what the total cost is.  This will also improve your CoCReturn since you'll have less cash to recover.
3 - The balance to be paid in the form of a lean/mortgage from the seller to you.
4 - Loan terms to be interest a little higher than a bank would give you, but your payments will be interest only for 7 years with a balloon at 7 years.  This gives the seller a continued CF, and with the added interest income, should make more money than if they sold the property for the Asking Price...and, his tax situation is controlled. This greatly improves your CF.  In 7 years you can either:
     A -  sell the property, or...
     B -  payoff the balloon note with traditional financing, or...
     C - see if the seller would like to extend the loan for another 7 years.
8 - If/when the seller likes this deal, you have the opportunity to do the same thing for the rest of his properties.  This is why I said in the beginning, this was the "Holy Grail of opportunities".