OWNER FINANCING FROM A FAMILY FRIEND FOR MY FIRST REAL ESTATE DEA

[Gary C Jones]

I am currently going to be attempting to do a owner finance with one of my close friend's father. We have had a good relationship for over 30 years. He owns the property free and clear. This one is a SFR, currently with a tenant. 1,056 sq ft., 2 bed 1 bath. I believe that adding a 3rd bedroom and another bath or half bath would increase the value. As it sits now, I would say the value is about $80k. Any ideas on how to structure this deal would be greatly appreciated. I was thinking about offering $80k, putting $10k down and financing the remaining $70k for 15 years or 180 months with 10% interest. So the monthly payment would be about $389. Is the interest (10%) added each month? If so, payment would be about $430/month. Thanks for any and all input and advice.

[Kathryn Pierce]

First thought, 10% seems fairly high for owner financing. 

Second, google 'mortgage calculator'. Interest compounds (on the total amount) so your payment is closer to double what you are thinking. It may still be a good deal, but just making sure you are using the right numbers.