Seller Financing vs. Conventional Loan

[Michael Puckett]

I am looking to purchase a duplex. I am pre-approved for a conventional loan by my lender. My original plan was to move into one side of the duplex and rent the other side and rent my current house. By moving in it lessens my out of pocket cash and gives me the ability to own 3 units (2 in the duplex and one being my house). If able to rent the other side of the duplex and my current home I will create a cash flow of $700.00. But the duplex owner has offered me seller financing at 8% interest with a mortgage payment once a month over 30 years. I don't have to pay a down payment and would just need to cover the closing costs. I would be able to stay in my current home and rent both sides creating $500 of cash flow with more cash left in my pocket. I am just starting in Real Estate and my biggest needs are cash in my pocket, cash flow, experience and education. The duplex meets all of my needs and the seller financing gives me more cash in my pocket but less cash flow while the conventional loan sucks up my pocket cash and provides more cash flow. This will be my cornerstone property that will set me up for future buys and I want to make sure that I am in the best position to purchase another multi-family property in the next year or two. What do you guys think? Should I go the conventional loan route or the seller financing?

[Brandon Sturgill]

@Michael Puckett Purchase money mortgages are the ultimate way to acquire real estate...and if the terms work, always superior to any comparable product you can get from a conforming lender. Just focus on terms...zero out of pocket is great. 8% interest not so much...if you want cash flow, negotiate this down to 6%.

Once you learn how to structure purchase money mortgages and skip the bank, you'll never need a lender again....no credit checks, no minimum reserves, no DTI constraints....

Good luck