Hello Bigger Pockets family! So I want to get started into buying rental properties and would like to know if any of you guys have purchased a unit or more through seller financing? If so, how do you structure it? Do you, as the buyer, provide a downpayment and set the interests paid monthly? what is the standard interest for a seller financing property? How many years should you seller finance it before refinance? When you refinance, do you have to pay a downpayment or its not required? How do you keep track of how much you have paid towards to debt balance or the interest paid monthly just goes straight to the sellers pocket?
I know it's alot of questions but any kind of guidance will be very much appreciate it. Thank you everybody
Real Estate Agent · Houston, TX · Member since 2019 · 763 posts · 500 votes
4y
Seller financing is 100% negotiable on all fronts. It is about negotiating a deal that everyone is happy with. I currently have two seller finance deals and they are structured this way:
25% Down / 5% Interest / 30 year amortized with a balloon payment in 5 years.
10% Down / 6% Interest / 30 year Amortized loan
I offer interest rates slightly above the current rates that gives me less incentive to refi out of the seller financing deal which makes the seller more money. When they ask for higher interest rates I just point out to them that even though it looks like they are going to get more, I have the option to refi at any time which instantly takes away their gains.