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Updated over 5 years ago on . Most recent reply

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Charlotte Dunford
  • Investor
  • Johns Creek, GA
488
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Good seller financing terms?

Charlotte Dunford
  • Investor
  • Johns Creek, GA
Posted

Do you consider this to be good seller financing terms?

35% down, 5% interest, 30-year amortization, 10-year balloon.

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Frank Rolfe#1 Mobile Home Park Investing Contributor
  • Real Estate Investor
  • Ste. Genevieve, MO
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Frank Rolfe#1 Mobile Home Park Investing Contributor
  • Real Estate Investor
  • Ste. Genevieve, MO
Replied

Good seller financing would be 20% down. That being said, 35% is about 5% more than some banks would require, so it's not bad. But to make it considered "good'" you'd have to get a lower down payment. Remember that the lower the down payment, the higher the cash-on-cash return (assuming the interest rate is lower than the cap rate).

Since the seller is earning an interest rate that is far above their other options (CDs are only paying 2%) why would he not want to carry more? What will he do with the difference that can earn more interest than you're offering?

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