Trying To Put Together My First Seller Financing Deal

[Michael Bracewell]

Good morning everyone,

I have a property in the Milledgeville, Ga that would be a value add to my portfolio and I am looking at making two offers. The first, would be a lower cash offer which would be fairly straight forward, but the other would be a higher offer with the property owner having the chance to earn interest over a fifteen year time frame. 

My question is, how should I go about structuring this deal as a proposal to the homeowner? Obviously, I personally would prefer this option as a way to keep my upfront cost out of pocket to a minimum even if it means paying more over time because the property would still cash flow $100.00 a month with the current rates. 

If you were in my position, how would you get started? Is seller financing a good way to approach this or should I look for alternative ways to approach this deal. Thank you for any advice and for taking time out of your day to help!

[Mitch Messer]

Hey @Michael Bracewell, welcome to BiggerPockets!

Seller financing is best seen as part of a solution to a problem that the seller has. Receiving payments over time might help them reduce their taxes. Or, you might be more inclined to pay their (too high) price if you can get better terms. Regardless, the key is to let the seller's situation guide the terms, provided that you've already run your numbers (as @Scott Couch points out) and fully understand what making payments will do to your cash flow and how it will impact your cash-on-cash return. (Honestly, $100/mo is not a safe place to be, from a cash flow standpoint!)

As long as the numbers work for you, there's ZERO downside to making a seller financing offer, particulary in Georgia, where the seller can easily foreclose on you if you don't perform!