Help me explain Seller Financing to Grandma!

[Jim Sestito]

Hello BP,

Dear Grandma is looking to downsize.  Her house completely paid for and she has one note on it that she used to purchase a car with a about $18K remaining.

The house is a two family.  The  main unit is a 3 bed 2 bath (she lives in this one) and the apartment off the side is a 1 bed 1 bath (Just became vacant Jan 1).  The house has a nice yard and a separate garage spot for each unit.  Both units need updating to get full market rent for the area but are currently very livable.  

Roughly $370,000 ARV --- Needs about $20K to get there.

Grandma is about 80 years old and financially secure.  

I somewhat understand seller financing from the podcasts and various BP searchers.  But I would like to hear the best quick Grandma elevator pitches for this situation.

Why would this be beneficial for her?  Why is this beneficial for me?

If any needs more info please let me know.  Hoping this will be a fun thread!

Best  -- Jim 

[Aaron Mazzrillo]

Grandma, I'd like you to carry the paper. (That is generally how older folks refer to it.)

Here is why:

Let's say you need $200/month to live. If I pay you $20,000 for your house, you put that money in the bank and collect .01% interest. Every month you go down and take out your $200. In 101 months from now, you're cutting coupons for Alpo and standing in line at the grocery store pretending you have a dog just so you have something to eat for dinner.

Now let's say you carry the paper. If I pay you 5% on your $20,000 and we do it over a 10 year period, You collect $212.13 every month for the next 10 years. That means you get to eat your Raisin Bran, Quaker Oats, prunes, bread pudding, meatloaf, green bean casserole, fruit cocktail and still have $12.13 extra every month to save for a trip to Cracker Barrel or buy some hard candy. But just between you and me grandma, and as much as I love you, if you're still walking the planet in 10 years, I'm going to take you to the top of the basement stairs and give you a little nudge. I mean, nobody, absolutely NOBODY in the family expects you to last more than 6. Uncle Rico even went in on 4 years!

So, what do you think grandma, sound like a good plan?