Owner Finance of 3 properties

[Veronica Thomas]

My husband I and have been approached by a family friend who is looking to get out of his 3 single family homes (1 unoccupied, 2 occupied). He wants $250,000 over 5 years, so $50,000 a year in a one time payment each year.  Each unit will bring in $850 rent minimum.  The $850 isn't enough to cover the $50,000, but we do have 5 other rentals that each cash flow.  We both also work full time jobs.

I'm just curious if there is anything we should be looking for in an owner finance, questions to ask, hard points to be clear on.  Our other purchases have been traditional financing, so this owner financing is new to us.

[Jonathan Greene]

This would not be traditional owner financing and because of the lump sums each year, the seller would still pay capital gains on each payment since there is no personal mortgage to alleviate that. In reality, it might not help him as much as he thinks. You might want to propose the idea of the 50k downpayment in year one and then traditional financing with him as the bank after that which will net him X/month but reduce his capital gains.